EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
OMEGA RESEARCH, INC.,
WOW ACQUISITION CORPORATION
AND
WINDOW ON WALLSTREET INC.
OCTOBER 25, 1999
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER..............................................3
1.1 The Merger. .........................................3
1.2 Closing; Effective Time.................................4
1.3 Effect of the Merger....................................4
1.4 Articles of Incorporation; Bylaws. ....................4
1.5 Directors and Officers. ...............................4
1.6 Effect on Capital Stock.................................4
1.7 Surrender of Certificates...............................7
1.8 No Further Ownership Rights in Company Capital Stock. .8
1.9 Lost, Stolen or Destroyed Certificates..................8
1.10 Tax and Accounting Consequences.........................8
1.11 Withholding Rights......................................9
1.12 Taking of Necessary Action; Further Action..............9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY...............9
2.1 Organization, Standing and Power........................9
2.2 Capital Structure......................................10
2.3 Authority..............................................11
2.4 Financial Statements...................................12
2.5 Absence of Certain Changes.............................12
2.6 Absence of Undisclosed Liabilities.....................13
2.7 Litigation.............................................13
2.8 Restrictions on Business Activities....................13
2.9 Compliance With Laws...................................13
2.10 Title to Property......................................13
2.11 Intellectual Property. ...............................14
2.12 Environmental Matters. ...............................15
2.13 Taxes. ...............................................16
2.14 Employee Benefit Plans.................................17
2.15 Employee Matters.......................................20
2.16 Interested Party Transactions..........................21
2.17 Insurance..............................................21
2.18 Regulatory Matters. ..................................21
2.19 Material Contracts. ..................................23
2.20 Year 2000 Compliance...................................25
2.21 Company Affiliate Agreements...........................26
2.22 State Takeover Statutes................................26
2.23 Tax and Accounting Treatment...........................26
2.24 Brokers' and Finders' Fees.............................26
2.25 Non-Reliance...........................................26
2.26 Representations Complete...............................26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT...............27
3.1 Organization, Standing and Power.......................27
3.2 Capital Structure......................................27
3.3 Authority..............................................28
3.4 SEC Documents; Financial Statements....................29
3.5 Absence of Undisclosed Liabilities.....................29
3.6 Absence of Certain Changes.............................29
3.7 Litigation.............................................30
3.8 Tax Treatment..........................................30
3.9 Broker's and Finders' Fees.............................30
3.10 Non-Reliance...........................................30
3.11 Representations Complete...............................30
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME....................30
4.1 Conduct of Business....................................30
ARTICLE V ADDITIONAL AGREEMENTS..................................31
5.1 Access to Information..................................31
5.2 Public Disclosure......................................31
5.3 Consents; Cooperation..................................31
5.4 Reasonable Best Efforts and Further Assurances.........32
5.5 Blue Sky Laws..........................................32
5.6 Listing of Additional Shares...........................32
5.7 Pooling Accounting.....................................32
5.8 Affiliate Agreements...................................33
5.9 Tax Treatment..........................................33
5.10 Company Options........................................33
5.11 Form S-8...............................................33
5.12 Agreement Regarding Employment;
Non-Competition Agreement..............................34
5.13 Director and Officer Indemnification. ................34
5.14 Shareholder Litigation.................................34
5.15 Stock Option Agreements................................34
5.16 Investment Acknowledgment Agreement....................34
5.17 Registration Rights Agreement..........................34
5.18 Company Indebtedness...................................34
5.19 Observation Rights.....................................35
ARTICLE VI CONDITIONS TO THE MERGER...............................35
6.1 Conditions to Obligations of Each Party to
Effect the Merger......................................35
6.2 Additional Conditions to Obligations of Company........36
6.3 Additional Conditions to Obligations of Parent
and Merger Sub.........................................36
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ARTICLE VII EXPENSES, AMENDMENT AND WAIVER.........................37
7.1 Expenses...............................................37
7.2 Amendment..............................................38
7.3 Extension; Waiver......................................38
ARTICLE VIII GENERAL PROVISIONS.....................................38
8.1 Non-Survival at Effective Time.........................38
8.2 Notices................................................38
8.3 Interpretation. ......................................39
8.4 Counterparts...........................................39
8.5 Entire Agreement; Nonassignability;
Parties in Interest....................................39
8.6 Severability...........................................40
8.7 Remedies Cumulative....................................40
8.8 Governing Law..........................................40
8.9 Rules of Construction..................................40
8.10 Definitions............................................40
8.11 Disputes...............................................41
SCHEDULES
COMPANY DISCLOSURE SCHEDULE
PARENT DISCLOSURE SCHEDULE
OTHER SCHEDULES:
SCHEDULE 2.21
SCHEDULE 5.10
SCHEDULE 5.12(a)
SCHEDULE 5.12(b)
SCHEDULE 5.15
SCHEDULE 5.16
SCHEDULE 5.18
EXHIBITS
EXHIBIT "A" - ARTICLES OF MERGER
EXHIBIT "B" - FORM OF COMPANY AFFILIATE AGREEMENT
EXHIBIT "C" - FORM OF AGREEMENT REGARDING EMPLOYMENT
EXHIBIT "D" - FORM OF SHAREHOLDER NON-COMPETITION AND
NON-DISCLOSURE AGREEMENT
EXHIBIT "E" - FORM OF STOCK OPTION AGREEMENT (ALL EMPLOYEES)
EXHIBIT "E-1" - FORM OF STOCK OPTION AGREEMENT (XXXXXXXX AND BLACK)
EXHIBIT "F" - FORM OF INVESTMENT ACKNOWLEDGMENT AGREEMENT
EXHIBIT "G" - REGISTRATION RIGHTS AGREEMENT
EXHIBIT "H" - OPINION LETTER MATTERS
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made
and entered into as of October 25, 1999, by and among Omega Research, Inc., a
Florida corporation ("Parent"), WOW Acquisition Corporation, a Texas corporation
and wholly owned subsidiary of Parent ("Merger Sub"), and Window on WallStreet
Inc., a Texas corporation ("Company").
RECITALS
A. The Board of Directors of Company has unanimously (i) determined
that it is advisable and fair to, and in the best interests of, Company and its
shareholders that, upon the terms and subject to the conditions of this
Agreement, Merger Sub merge with and into Company, with Company being the
surviving corporation (the "Merger"), (ii) approved this Agreement, the Merger
and the other transactions contemplated hereby and (iii) recommended the
approval of this Agreement and the Merger by the shareholders of Company.
B. The Shareholders of Company have approved this Agreement, the Merger
and the other transactions contemplated hereby.
C. The Board of Directors of Parent has (i) determined that the Merger
is advisable and in the best interests of Parent and its stockholders and (ii)
approved this Agreement, the Merger and the other transactions contemplated
hereby.
D. Pursuant to the Merger, among other things, the outstanding shares
of Common Stock, no par value ("Company Common Stock"), of Company shall be
converted into the right to receive the consideration set forth herein.
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and to cause the Merger to qualify as a
"reorganization" under the provisions of Section 368(a)(1)(A) and 368(a)(2)(E)
of the Code, and as a pooling of interests for financial accounting purposes.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement, the Articles of
Merger in the form attached hereto as EXHIBIT A (the "Articles of Merger") and
the applicable provisions of the Texas Business Corporation Act (collectively,
"Texas Law"), Merger Sub shall be merged with and into Company, the separate
corporate existence of Merger Sub shall cease and Company shall continue as the
surviving corporation. Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 CLOSING; EFFECTIVE TIME. The consummation of the Merger (the
"Closing") shall take place at 10:00 a.m. (Miami time) on October 25, 1999 (the
"Closing Date"). It is contemplated that the execution and delivery of this
Agreement and the Closing will occur simultaneously. The Closing shall take
place at the offices of Bilzin Xxxxxxx Xxxx Price & Xxxxxxx LLP, 2500 First
Union Financial Center, 000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx 00000, or
at such other location as to which the parties hereto may agree in writing. In
connection with the Closing, the parties hereto shall cause the Merger to be
consummated by filing the Articles of Merger with the Secretary of State of the
State of Texas, in accordance with the relevant provisions of Texas Law (the
time of such filing, or such later time as may be agreed to by the parties and
set forth in the Articles of Merger, being hereinafter referred to as the
"Effective Time").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Articles of Merger and the
applicable provisions of Texas Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 ARTICLES OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the articles of incorporation (the
"Articles of Incorporation") of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation; PROVIDED, HOWEVER, that ARTICLE ONE of the Articles of
Incorporation shall be amended to read as follows: "The name of the corporation
(the "Corporation") is Window on WallStreet Inc."
(b) The Bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors of
Merger Sub shall be the initial directors of the Surviving Corporation, until
their successors are duly elected or appointed and qualified. The officers of
Merger Sub at the Effective Time shall be the following individuals, until their
respective successors are duly elected or appointed and qualified:
Xxxx X. Xxxxxxxx - Co-President
T. Xxxxx Xxxxx - Co-President
Xxxxx Xxxxxx - Executive Vice President, Sales & Marketing
Xxxx Xxxxx - Senior Vice President, Marketing & Business Development
Xxxx X. Xxxxx - Secretary and General Counsel
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1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, Company or the
holders of any of the following securities:
(a) CONVERSION OF COMPANY CAPITAL STOCK. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than any shares of Company Common Stock to be cancelled pursuant to
Section 1.6(b) or any shares, if any, held by persons who have not voted such
shares for approval of the Merger and with respect to which shall become
entitled to exercise dissenters' rights in accordance with Texas Law
("Dissenting Shares")) will be cancelled and extinguished and be converted
automatically into the right to receive .210974 shares (the "Exchange Ratio") of
Parent Common Stock, par value $.01 per share ("Parent Common Stock"), upon
surrender of the certificate representing such share of Company Common Stock in
the manner provided in Section 1.7 (or, in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit and, if required, bond, in
the manner provided in Section 1.9); provided, however, that the parties hereto
acknowledge and agree that the Exchange Ratio has been determined based upon all
of the issued and outstanding shares of Company Common Stock as of the Effective
Time being cancelled and extinguished and automatically converted into an
aggregate of 2,000,000 shares of Parent Common Stock and, to the extent that the
number of issued and outstanding shares of Company Common Stock is greater than
the number set forth in Section 2.2, then the Exchange Ratio shall be reduced
accordingly.
(b) CANCELLATION OF COMPANY CAPITAL STOCK OWNED BY PARENT,
MERGER SUB OR COMPANY. Each share of Company Common Stock that is owned by
Company as treasury stock and each share of Company Common Stock owned by Parent
or Merger Sub or any direct or indirect wholly owned subsidiary of Parent,
Merger Sub or Company immediately prior to the Effective Time shall be canceled
and extinguished without any conversion thereof.
(c) COMPANY STOCK OPTION PLAN. At the Effective Time, all
options to purchase Company Common Stock ("Company Options") then outstanding
under the Company's 1997 Long Term Incentive Plan (the "Company Stock Option
Plan") or otherwise granted to employees of the Company prior to the adoption of
the Company Stock Option Plan shall be assumed by Parent in accordance with
Section 5.10.
(d) UNVESTED COMPANY COMMON STOCK. If any shares of Company
Common Stock outstanding immediately prior to the Effective Time are unvested or
are subject to a repurchase option, risk of forfeiture or other condition under
any applicable restricted stock purchase agreement, or other agreement with
Company or under which Company has any rights, then (unless such condition
terminates by virtue of the Merger pursuant to the express term of such
agreement) the shares of Parent Common Stock issued in exchange for such shares
of Company Common Stock will also be unvested and subject to the same repurchase
option, risk of forfeiture or other condition, and the certificates representing
such shares of Parent Common Stock may accordingly be marked with appropriate
legends. Company shall take all action that may be necessary to ensure that,
from
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and after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(e) CAPITAL STOCK OF MERGER SUB. At the Effective Time, each
share of Common Stock, par value $.01 per share, of Merger Sub ("Merger Sub
Common Stock") issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation, and the Surviving Corporation shall become a wholly owned
subsidiary of Parent. Each stock certificate of Merger Sub evidencing ownership
of any such shares shall continue to evidence ownership of such shares of
capital stock of the Surviving Corporation.
(f) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
appropriately adjusted to reflect the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock or Company Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Stock or
Company Common Stock occurring after the date hereof and prior to the Effective
Time and of any increase in the number of shares of Company Common Stock
outstanding on a fully diluted, as converted basis relative to such number as
derived from Section 2.2 hereof, so as to provide the parties the same economic
effect as contemplated by this Agreement prior to such stock split, reverse
split, stock dividend, reorganization, recapitalization, like change or
increase.
(g) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued, but in lieu thereof each holder of shares of Company
Common Stock who would otherwise be entitled to a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of Parent Common Stock to
be received by such holder) shall receive from Parent an amount of cash (rounded
to the nearest whole cent) equal to the product of (i) such fraction, multiplied
by (ii) the average of the last sales price for a share of Parent Common Stock
as quoted on The Nasdaq National Market for the last five full trading days
prior to the Effective Time.
(h) DISSENTERS' RIGHTS. Any Dissenting Shares shall not be
converted into Parent Common Stock but shall instead be converted into the right
to receive such consideration as may be determined to be due with respect to
such Dissenting Shares pursuant to Texas Law. Company agrees that, except with
the prior written consent of Parent, or as required under Texas Law, it will not
voluntarily make any payment with respect to, or settle or offer to settle, any
such purchase demand. Each holder of Dissenting Shares ("Dissenting
Shareholder") who, pursuant to the provisions of Texas Law, becomes entitled to
payment of the fair value for shares of Company Common Stock shall receive
payment therefor (but only after the value therefor shall have been agreed upon
or finally determined pursuant to such provisions). If, after the Effective
Time, any Dissenting Shares shall lose their status as Dissenting Shares, Parent
shall issue and deliver, upon surrender by such shareholder of a certificate or
certificates representing shares of Company Common Stock, the number of shares
of Parent Common Stock to which such shareholder would otherwise be entitled
under this Section 1.6 and this Agreement.
4
(i) RESALE RESTRICTION. Holders of Company Common Stock
receiving Parent Common Stock pursuant to this Merger will not at any time offer
or sell all or any part of the shares of Parent Common Stock unless (a) a
registration statement under the Federal Securities Act of 1933, as amended (the
"Securities Act") is in effect with respect thereto; or (b) an opinion of such
shareholder's counsel, in form and substance reasonably satisfactory to Parent
(notice of unacceptability of such opinion to be given within 7 business days
after receipt thereof), has been delivered to the effect that such offer or sale
is an exempt transaction under the Act or registration thereunder is not
required in connection with such offer or sale; or (c) the Securities and
Exchange Commission (the "SEC"), or a member of the staff thereof, has indicated
in writing that "no-action" would be taken if the proposed offer or sale were to
be made without the filing of a registration statement; and any certificate
issued representing such shares of Parent Common Stock bears the following
legend:
"The securities represented hereby have not been registered
under the Federal Securities Act of 1933, as amended, or
applicable state securities laws and may not be sold or
transferred in the absence of an effective registration
statement under such Act and applicable state securities laws
or evidence reasonably satisfactory to the issuer that such
registrations are not required."
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent's transfer agent, or another person
selected by Parent and reasonably acceptable to Company, shall act as exchange
agent (the "Exchange Agent") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK AND CASH. Promptly after
the Effective Time, Parent shall make available to the Exchange Agent for
exchange in accordance with this Article I, through the procedures set forth in
Section 1.7 or such other reasonable procedures as Parent may adopt, (i) the
shares of Parent Common Stock issuable pursuant to Section 1.6(a) in exchange
for shares of Company Common Stock outstanding immediately prior to the
Effective Time and (ii) cash in an amount sufficient to permit payment of cash
in lieu of fractional shares pursuant to Section 1.6(g).
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time,
the Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock, whose
shares were converted into the right to receive shares of Parent Common Stock
(and cash in lieu of fractional shares) pursuant to Section 1.6, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon receipt of the
Certificates by the Exchange Agent, and shall be in such form and have such
other provisions as Parent may reasonably require) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock (and cash in lieu of fractional
shares). Upon surrender of a Certificate for
5
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Parent Common Stock and payment in
lieu of fractional shares which such holder has the right to receive pursuant to
Section 1.6, and the Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of Company Common Stock will be deemed from and after
the Effective Time, for all corporate purposes, other than the payment of
dividends, to evidence the ownership of the number of full shares of Parent
Common Stock into which such shares of Company Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date after the Effective
Time theretofore payable (but for the provisions of this Section 1.7(d)) with
respect to such shares of Parent Common Stock.
(e) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.7, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to any person for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) DISSENTING SHARES. The provisions of this Section 1.7
shall also apply to Dissenting Shares that lose their status as such, except
that the obligations of Parent under this Section 1.7 shall commence on the date
of loss of such status.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY CAPITAL STOCK. All shares of
Parent Common Stock issued (and cash in lieu of fractional shares paid) upon the
surrender for exchange of shares of Company Common Stock in accordance with the
terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of Parent
Common Stock (and cash in lieu of fractional shares) as may be required pursuant
to
6
Section 1.6; PROVIDED, HOWEVER, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties
hereto that the Merger shall constitute a reorganization within the meaning of
Section 368(a) of the Code and a pooling of interests for accounting purposes.
1.11 WITHHOLDING RIGHTS. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the number of shares of Parent Common Stock
otherwise deliverable under this Agreement, and from any other payments made
pursuant to this Agreement, such amounts as Parent and the Surviving Corporation
are required to deduct and withhold with respect to such delivery and payment
under the Code or any provision of state, local, provincial or foreign tax law.
To the extent that amounts are so withheld, such withheld amounts shall be
treated for all purposes of this Agreement as having been delivered and paid to
the holder of shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent and the Surviving Corporation.
1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company,
Parent and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as disclosed in the document of even date herewith
delivered by Company to Parent prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Agreement
(the "Company Disclosure Schedule"), any exception so disclosed in the Company
Disclosure Schedule to specifically identify the Section of this Agreement to
which such exception relates, provided that exceptions shall apply to all
applicable representations (except that any exceptions to Sections 2.2, 2.4,
2.5, 2.6, 2.13, 2.14, 2.15, and 2.16 shall be required to specifically identify
the applicable Section to which such exception relates) Company represents and
warrants to Parent and Merger Sub as follows:
2.1 ORGANIZATION, STANDING AND POWER. Each of Company and its
subsidiaries (as defined in Section 8.10) is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of Company and its subsidiaries has the corporate
7
power to own its properties and to carry on its business as now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect (as defined in Section 8.10) on Company. Company
has delivered to Parent a true and correct copy of the certificate or articles
of incorporation, as amended, and bylaws, as amended, and any other charter or
organizational documents, each as amended, of Company and each of its
subsidiaries. Neither Company nor any of its subsidiaries is in violation of any
of the provisions of its certificate or articles of incorporation or bylaws or
other charter or organizational documents, each as amended. Company is the owner
of all outstanding shares of capital stock or voting securities of each of its
subsidiaries and all such shares and voting securities are duly authorized,
validly issued, fully paid and nonassessable. All of the outstanding shares of
capital stock and voting securities of each such subsidiary are owned by Company
free and clear of all liens, charges, claims or encumbrances or rights of
others. There are no outstanding subscriptions, options, warrants, puts, calls,
rights, exchangeable or convertible securities or other commitments or
agreements of any character relating to the issued or unissued capital stock or
other securities of any such subsidiary, or otherwise obligating Company or any
such subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire
any such securities. Company does not directly or indirectly own any
subsidiaries or any equity or similar interest in, or any interest convertible
or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture, limited liability company or other
business association or entity.
2.2 CAPITAL STRUCTURE. The authorized capital stock of Company consists
of 50,000,000 shares of Company Common Stock, no par value, of which there were
issued and outstanding as of the date hereof 9,479,845 shares held of record by
9 individuals. There are no other outstanding shares of capital stock or voting
securities and no outstanding commitments to issue any shares of capital stock
or voting securities as of the date hereof, other than pursuant to the exercise
of Company Options outstanding as of the date hereof. All outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid and
non-assessable and are free and clear of any liens or encumbrances other than
any liens or encumbrances created by or imposed upon the holders thereof, and
are not subject to preemptive rights or rights of first refusal created by
statute, the articles of incorporation or bylaws, each as amended, of Company or
any agreement to which Company is a party or by which it is bound. As of the
date hereof, Company has reserved an aggregate of 2,000,000 shares of Company
Common Stock for issuance to employees, consultants and directors pursuant to
the Company Stock Option Plan, of which no shares have been issued pursuant to
option exercises and 308,600 shares are subject to outstanding, unexercised
Company Options. In addition, 556,747 shares of Company Common Stock are subject
to Company Options that were granted prior to the adoption of the Company Stock
Option Plan. Except as set forth in the preceding two sentences, Company has not
issued or granted additional options under the Company Stock Option Plan or
otherwise. Company has not issued or granted any direct stock purchases or
awards, stock appreciation rights or performance units under the Company Stock
Option Plan or otherwise. Except for the rights created pursuant to this
Agreement and the Company Stock Option Plan and applicable option agreements,
there are no other options, warrants, calls, rights, commitments or agreements
of any character to which Company is a party or by which it is
8
bound obligating Company to issue, deliver, sell, repurchase or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any shares of capital
stock of Company or obligating Company to grant, extend, accelerate the vesting
of, change the price of, or otherwise amend or enter into any such option,
warrant, call, right, commitment or agreement. Except for this Agreement and as
provided by Section 5.10, there are no contracts, commitments or agreements
relating to voting, purchase or sale of Company's capital stock (i) between or
among Company and any of its shareholders or (ii) between or among any of
Company's shareholders. The terms of the Company Stock Option Plan and Company
Options permit the assumption of all of the Company Options as provided in this
Agreement, without the consent or approval of the holders of such securities,
the Company's shareholders, or otherwise. True and complete copies of all
agreements and instruments relating to Company Options or relating to or issued
under the Company Stock Option Plan have been provided to Parent and such
agreements and instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such agreements or
instruments, from the form provided to Parent in any particular case or
generally. All outstanding shares of Company Common Stock and all Company
Options were issued in compliance with all applicable federal and state
securities laws.
2.3 AUTHORITY. Company has all requisite power and authority (corporate
and otherwise) to enter into this Agreement and the other agreements and
instruments to be executed and delivered by it pursuant hereto and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and such other agreements and instruments and the consummation of
such other agreements and instruments and the transactions contemplated hereby
and thereby have been duly authorized by all necessary action (corporate and
otherwise) on the part of Company, including, without limitation, the approval
and adoption of this Agreement and the Merger by the holders of at least
two-thirds of the shares of Company Common Stock outstanding as of the date
hereof as and in the manner required under Texas Law and Company's articles of
incorporation and bylaws, as amended. Each of this Agreement and such other
agreements and instruments have been duly executed and delivered by Company and
each constitutes the valid and binding obligation of Company, enforceable
against Company in accordance with its terms, except as such enforcement may be
limited by (i) the effect of bankruptcy, insolvency, reorganization,
receivership, conservatorship, arrangement, moratorium or other laws affecting
or relating to the rights of creditors generally, or (ii) the rules governing
the availability of specific performance, injunctive relief or other equitable
remedies and general principles of equity, regardless of whether considered in a
proceeding in equity or at law. The execution and delivery of this Agreement and
each of such other agreements and instruments by Company does not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of, any obligation or loss of any benefit under (i)
any provision of the certificate or articles of incorporation, bylaws, or other
charter or organizational documents, each as amended, of Company or any of its
subsidiaries, or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Company
or any of its subsidiaries or any of their respective properties or assets. No
consent, approval, order or authorization of, or
9
registration, declaration or filing with, any court, administrative agency or
commission, self-regulatory organization ("SRO") or other foreign or domestic
governmental or quasi-governmental authority or instrumentality (each of the
foregoing, a "Governmental Entity") is required by or with respect to Company or
any of its subsidiaries in connection with the execution or delivery of this
Agreement or such other agreements and instruments, the performance of Company's
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, except for (i) the filing of the Articles of
Merger as provided in Section 1.2, (ii) consents, authorizations, filings,
approvals and registrations set forth in the Company Disclosure Schedule
specifically identifying this subsection and which, if not obtained or made,
would not have a Material Adverse Effect on Company and would not prevent, or
materially alter or delay, any of the transactions contemplated by this
Agreement or such other agreements and instruments and (iii) any filings or
applications as may be required under applicable SRO or state broker-dealer laws
as set forth in the Company Disclosure Schedule. Company is not aware of any
reason why the approvals of all Governmental Entities necessary to permit
consummation of the Merger or the other transactions contemplated by this
Agreement will not be received without the imposition of a condition or
requirement.
2.4 FINANCIAL STATEMENTS. Company has furnished to Parent the audited
consolidated financial statements (including audited consolidated balance sheet,
statements of income or loss and accumulated deficit and cash flows) of Company
and its subsidiaries as of and for the fiscal years ended December 31, 1997 and
December 31, 1998, and the unaudited consolidated financial statements
(including unaudited consolidated balance sheet, statements of income or loss
and accumulated deficit and cash flows) of the Company and its subsidiaries as
of and for the fiscal year ended December 31, 1996 and the nine month period
ended September 30, 1999 (collectively, the "Company Financial Statements"). The
Company Financial Statements (including the notes thereto), true, correct and
complete copies of which are attached to the Company Disclosure Schedule as
SCHEDULE 2.4 (a), were prepared in accordance with the books of account and
records of the Company, (b) fairly present the consolidated financial condition
and results of operations of the Company and its subsidiaries as of the dates
and for the periods indicated therein (subject, in the case of unaudited
non-fiscal year statements, to normal and recurring year-end adjustments), (c)
were prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods indicated and
consistent with each other (except as may be indicated in the notes thereto),
(d) were complete and correct in all material respects as of their respective
dates, and (e) make full and adequate disclosure of, and provision for, all
material liabilities of the Company as of the dates thereof.
2.5 ABSENCE OF CERTAIN CHANGES. Since December 31, 1998 (the "Company
Balance Sheet Date"), Company has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect on Company;
(ii) any acquisition, sale or transfer of any material asset of Company or any
of its subsidiaries other than in the ordinary course of business and consistent
with past practice; (iii) any change in accounting methods or practices
(including any change in depreciation or amortization
10
policies or rates) by Company or any revaluation by Company of any of its or any
of its subsidiaries' assets; (iv) any declaration, setting aside, or payment of
a dividend or other distribution with respect to the shares of Company, or any
direct or indirect redemption, purchase or other acquisition by Company of any
of its shares of capital stock; (v) any material contract entered into by
Company or any of its subsidiaries, other than in the ordinary course of
business and as provided to Parent, or any material amendment or termination of,
or default under, any material contract to which Company or any of its
subsidiaries is a party or by which it is bound; (vi) any amendment or change to
the articles of incorporation or bylaws of Company; (vii) any increase in or
modification of the compensation or benefits payable or to become payable by
Company to any of its directors, officers or employees other than as consistent
with past practices and which in the aggregate are not material; (viii) any
material change in the interest rate risk management and hedging policies,
procedures or practices of Company or any of its subsidiaries, or any failure to
comply with such policies, procedures and practices; or (ix) any agreement by
Company or any of its subsidiaries to do any of the things described in the
preceding clauses (i) through (viii) (other than negotiations with Parent and
its representatives regarding the transactions contemplated by this Agreement).
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. None of Company or any of its
subsidiaries has any material obligations or liabilities of any nature (matured
or unmatured, fixed or contingent) other than (i) those set forth or adequately
provided for in the balance sheet of Company and subsidiaries for the fiscal
quarter ended September 30, 1999 (the "Company Balance Sheet"), (ii) those
incurred in the ordinary course of business consistent with past practice since
the Company Balance Sheet Date and which have not had and are not reasonably
likely to have a Material Adverse Effect on Company, and (iii) those incurred in
connection with the execution of this Agreement.
2.7 LITIGATION. There is no private or governmental action, suit,
proceeding, claim, arbitration, inquiry, examination, inspection or
investigation pending by or before any Governmental Entity, agency, court or
tribunal, foreign or domestic or, to the knowledge (as defined in Section 8.10)
of Company or any of its subsidiaries, threatened against Company or any of its
subsidiaries or any of their respective properties or any of their respective
officers or directors (in their capacities as such). There is no judgment,
decree or order against Company or any of its subsidiaries, or, to the knowledge
of Company and its subsidiaries, any of their respective directors or officers
(in their capacities as such).
2.8 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon Company or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any current business practice of Company or any of its
subsidiaries, any acquisition of property by Company or any of its subsidiaries
or the conduct of business by Company or any of its subsidiaries as currently
conducted by Company or any of its subsidiaries.
2.9 COMPLIANCE WITH LAWS. Except with respect to filings and
applications as may be required under applicable SRO or state broker-dealer laws
as set forth in the Company Disclosure Schedule, each of Company and its
subsidiaries has complied in all material respects with all
11
applicable federal, state, local, self-regulatory and foreign laws, statutes,
ordinances, rules and regulations, and is not in violation in any material
respect of, and has not received any notices of material violation with respect
to, its respective articles of incorporation or bylaws or other charter or
organizational documents, or any federal, state, local, self-regulatory or
foreign statute, law, ordinance, rule or regulation applicable to the conduct of
its business or the ownership or operation of its business.
2.10 TITLE TO PROPERTY. Company and its subsidiaries have good, valid
and marketable title to all of their respective properties, interests in
properties and assets, real and personal, reflected in the Company Balance Sheet
or acquired after the Company Balance Sheet Date (except properties, interests
in properties and assets sold or otherwise disposed of since the Company Balance
Sheet Date in the ordinary course of business), or in the case of leased
properties and assets, valid leasehold interests, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties and (iii) liens securing debt which is reflected on the Company
Balance Sheet. The plants, property and equipment of Company and its
subsidiaries that are used in the operations of their businesses are in good
operating condition and repair. All properties used in the operations of Company
and its subsidiaries are reflected in the Company Balance Sheet to the extent
GAAP require the same to be reflected. SCHEDULE 2.10 to the Company Disclosure
Schedule identifies each parcel of real property owned or leased by Company or
any of its subsidiaries.
2.11 INTELLECTUAL PROPERTY.
(a) Company and its subsidiaries are the sole and exclusive
owners of, or are licensed or otherwise possess legally enforceable and
unencumbered rights to use, all patents, trademarks, trade names, service marks,
domain names, database rights, copyrights, and any applications therefor,
maskworks, net lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material (collectively, "Intellectual
Property") that are used in the business of Company and its subsidiaries as
currently conducted by Company and its subsidiaries. Company has not (i)
licensed any Intellectual Property in source code form owned by Company to any
party or (ii) entered into any exclusive agreements relating to Intellectual
Property.
(b) SCHEDULE 2.11 to the Company Disclosure Schedule lists (i)
all patents and patent applications and all registered and unregistered
trademarks, trade names and service marks, registered and unregistered
copyrights, and maskworks included in the Intellectual Property, including the
jurisdictions in which each such Intellectual Property right has been issued or
registered or in which any application for such issuance and registration has
been filed, (ii) all licenses, sublicenses and other agreements as to which
Company is a party and pursuant to which any person is authorized to use any
Intellectual Property of the Company, and (iii) all licenses,
12
sublicenses and other agreements as to which Company or any of its subsidiaries
is a party and pursuant to which Company is authorized to use any Intellectual
Property of any third party ("Third Party Intellectual Property Rights"), which
is incorporated in, is, or forms a part of any product or service of Company or
any of its subsidiaries or which is otherwise used by Company or any of its
subsidiaries (excluding commercially available, off-the-shelf software). Except
as contained in any agreement reflecting Third Party Intellectual Property
disclosed in the Company Disclosure Schedule, no royalties or other continuing
payment obligations are or will be due in respect of Third Party Intellectual
Property Rights.
(c) To the knowledge of Company, there is no unauthorized use,
improper disclosure, infringement or misappropriation of any Intellectual
Property rights of Company or any of its subsidiaries, or any Intellectual
Property Right of any third party to the extent licensed by or through Company
or any of its subsidiaries, by any third party, including any employee or former
employee of Company or any of its subsidiaries. Except as contained in any
agreement reflecting Intellectual Property of the Company or Third Party
Intellectual Property disclosed in the Company Disclosure Schedule, neither
Company nor any of its subsidiaries has entered into any agreement to indemnify
any other person against any charge of unauthorized use, improper disclosure,
infringement or misappropriation of any Intellectual Property.
(d) None of Company or its subsidiaries is, nor will any of
them be as a result of the execution and delivery of this Agreement or the
performance of its obligations under this Agreement, in breach or right to
terminate of any license, sublicense or other agreement relating to any
Intellectual Property or Third Party Intellectual Property Rights.
(e) All patents, registered trademarks, service marks and
copyrights and other Intellectual Property held by Company and its subsidiaries
are valid and subsisting. Neither Company nor any of its subsidiaries (i) has
been charged in any suit, action or proceeding with any infringement, violation,
misappropriation, improper disclosure or unauthorized use of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
Intellectual Property right of any third party or a breach of any licence or
other agreement involving Intellectual Property nor has any claim been made with
respect thereto or (ii) has brought any action, suit or proceeding for
infringement, violation, misappropriation, improper disclosure or unauthorized
use of Intellectual Property or breach of any license or agreement involving
Intellectual Property against any third party. Neither the manufacturing, use,
marketing, licensing or sale of the products or services of Company or any of
its subsidiaries nor the operation of the business of Company or any of its
subsidiaries constitutes an infringement, violation, misappropriation,
unauthorized use or improper disclosure of any patent, trademark, service xxxx,
copyright, trade secret or other Intellectual Property right of any third party.
(f) Company has secured valid written assignments from all
consultants and employees who contributed to the creation or development of
Intellectual Property of the rights to such contributions that Company does not
already own by operation of law.
13
(g) Company has taken reasonable steps consistent with
prevailing industry practice to protect and preserve the confidentiality of all
Intellectual Property not otherwise protected by patents, patent applications or
copyright.
2.12 ENVIRONMENTAL MATTERS.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any
federal, state or local laws, ordinances, codes, regulations, rules, policies
and orders that are intended to assure the protection of the environment, or
that classify, regulate, call for the remediation of, require reporting with
respect to, or list or define air, water, groundwater, solid waste, hazardous or
toxic substances, materials, wastes, pollutants or contaminants, or which are
intended to assure the safety of employees, workers or other persons, including
the public.
(ii) "Hazardous Materials" shall mean any toxic or
hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
those substances, materials and wastes defined in or regulated under any
Environmental and Safety Laws.
(iii) "Property" shall mean all real property leased
or owned by Company or its subsidiaries either currently or in the past.
(iv) "Facilities" shall mean all buildings and
improvements on the Property of Company or its subsidiaries.
(b) Company represents and warrants as follows: (i) no
methylene chloride or asbestos is contained in or has been used at or released
from the Facilities; (ii) all Hazardous Materials have been disposed of in
accordance with all Environmental and Safety Laws; (iii) Company and its
subsidiaries have received no notice (verbal or written) of any noncompliance of
the Facilities or its past or present operations with Environmental and Safety
Laws; (iv) no notices, administrative actions or suits are pending or threatened
relating to a violation of any Environmental and Safety Laws; (v) neither
Company nor any of its subsidiaries are a potentially responsible party under
the federal Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), or state analog statute, arising out of events occurring prior to the
Effective Time; (vi) there have not been in the past, and are not now, any
Hazardous Materials on, under or migrating to or from the Facilities or any
Property; (vii) there have not been in the past, and are not now, any
underground tanks or underground improvements at, on or under any Property;
(viii) there are no polychlorinated biphenyls (PCBs) deposited, stored, disposed
of or located on the Property or Facilities or any equipment on the Property
containing PCBs at levels in excess of 50 parts per million; (ix) there is no
formaldehyde on the Property or in the Facilities, nor any insulating material
containing urea formaldehyde in the Facilities; (x) the Facilities and Company's
and its subsidiaries' uses and activities therein have at all times complied
with all Environmental and Safety Laws; and (xi) Company and its subsidiaries
have all the permits and licenses required to be issued under
14
Environmental and Safety Laws and are in full compliance with the terms and
conditions of those permits.
2.13 TAXES. Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax (as defined below) purposes of
which Company or any of its subsidiaries is or has been a member, have properly
completed and filed all Tax Returns (as defined below) required to be filed by
them and have paid all Taxes shown thereon to be due, other than any Taxes for
which adequate reserves under GAAP have been recorded in the Financial
Statements. Company has provided adequate accruals in accordance with GAAP in
its financial statements for any Taxes that have not been paid, whether or not
shown as being due on any Tax Returns. Company has no material liability for
unpaid Taxes accruing after the date of its latest Financial Statements other
than Taxes arising in the ordinary course of its business. There is (i) no
material claim for Taxes that is a lien against the property of Company or any
of its subsidiaries or is being asserted against Company or any of its
subsidiaries other than liens for Taxes not yet due and payable, (ii) Company
has not been notified and has no other knowledge that any audit of any Tax
Return of Company or any of its subsidiaries is being conducted by a Tax
authority, (iii) no extension of the statute of limitations on the assessment of
any Taxes granted by Company or any of its subsidiaries and currently in effect,
and (iv) there is no agreement, contract or arrangement to which Company or any
of its subsidiaries is a party that may result in the payment of any amount that
would not be deductible by reason of Sections 280G, 162 or 404 of the Code.
There has been no change in ownership of Company or any of its subsidiaries that
has caused the utilization of any losses of such entities to be limited pursuant
to Section 382 of the Code. Company has not been and will not be required to
include any material adjustment in Taxable income for any Tax period (or portion
thereof) pursuant to Section 481 or 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Merger. Neither Company nor any of its
subsidiaries has filed or will file any consent to have the provisions of
paragraph 341(f)(2) of the Code (or comparable provisions of any state Tax laws)
apply to Company or any of its subsidiaries. Neither Company nor any of its
subsidiaries is a party to any Tax sharing or Tax allocation agreement nor does
Company or any of its subsidiaries owe any amount under any such agreement.
Neither Company nor any of its subsidiaries has filed any disclosures under
Section 6662 or comparable provisions of state, local or foreign law to prevent
the imposition of penalties with respect to any Tax reporting position taken on
any Tax Return. Neither Company nor any of its subsidiaries has ever been a
member of a consolidated, combined or unitary group of which Company was not the
ultimate parent corporation. Company and each of its subsidiaries have in their
possession receipts for any Taxes paid to foreign Tax authorities. For purposes
of this Agreement, the following terms have the following meanings: "Tax" (and,
with correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, intangible, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Tax authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
15
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person. As used herein, "Tax Return" shall mean any return, statement, report or
form (including, without limitation, estimated Tax returns and reports,
withholding Tax returns and reports and information reports and returns)
required to be filed with respect to Taxes. Company and each of its subsidiaries
are in full compliance with all terms and conditions of any Tax exemptions or
other Tax-sparing agreement or order of a foreign government and the
consummation of the Merger shall not have any adverse effect on the continued
validity and effectiveness of any such Tax exemptions or other Tax-sparing
agreement or order.
2.14 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.14 to the Company Disclosure Schedule lists,
with respect to Company, any subsidiary of Company and any trade or business
(whether or not incorporated) which is treated as a single employer with Company
(an "ERISA Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of
the Code, (i) all material employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), (ii)
each loan to a non-officer employee in excess of five thousand dollars ($5,000),
loans to officers and directors and any stock option, stock purchase, phantom
stock, stock appreciation right, supplemental retirement, severance, sabbatical,
medical, dental, vision care, disability, employee relocation, cafeteria benefit
(Code Section 125) or dependent care (Code Section 129), life insurance or
accident insurance plans, programs or arrangements, (iii) all bonus, pension,
profit sharing, savings, deferred compensation or incentive plans, programs or
arrangements, (iv) other material (in the aggregate not in excess of $10,000)
fringe or employee benefit plans, programs or arrangements that apply to senior
management of Company and that do not generally apply to all employees, and (v)
any current or former employment or executive compensation or severance
agreements, written or otherwise and still operative and in effect, for the
benefit of, or relating to, any present or former employee, consultant or
director of Company (together, the "Company Employee Plans").
(b) Company has furnished to Parent a copy of each of the
Company Employee Plans and related plan documents (including trust documents,
insurance policies or contracts, employee booklets, summary plan descriptions
and other authorizing documents, and any material employee communications
relating thereto) and has, with respect to each Company Employee Plan which is
subject to ERISA reporting requirements, provided copies of the Form 5500
reports filed for the last three plan years. Any Company Employee Plan intended
to be qualified under Section 401(a) of the Code has either obtained from the
Internal Revenue Service ("IRS") a favorable determination letter as to its
qualified status under the Code, including all amendments to the Code effected
by the Tax Reform Act of 1986 and subsequent legislation, or has applied to the
Internal Revenue Service for such a determination letter prior to the expiration
of the requisite period under applicable Treasury Regulations or Internal
Revenue Service pronouncements in which to apply for such determination letter
and to make any amendments necessary to obtain a favorable determination.
Company has also furnished Parent with the most recent Internal Revenue Service
16
determination letter issued with respect to each such Company Employee Plan, and
nothing has occurred since the issuance of each such letter which could
reasonably be expected to cause the loss of the tax-qualified status of any
Company Employee Plan subject to Code Section 401(a).
(c) (i) None of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person; (ii)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code, with respect to any Company Employee
Plan, which could reasonably be expected to have, in the aggregate, a Material
Adverse Effect; (iii) each Company Employee Plan has been administered in
accordance with its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations (including ERISA and the Code),
except as would not have, in the aggregate, a Material Adverse Effect, and
Company and each subsidiary or ERISA Affiliate have performed all obligations
required to be performed by them under, are not in any material respect in
default under or violation of, and have no knowledge of any default or violation
by any other party to, any of the Company Employee Plans; (iv) neither Company
nor any subsidiary or ERISA Affiliate is subject to any liability or penalty
under Sections 4976 through 4980 of the Code or Title I of ERISA with respect to
any of the Company Employee Plans; (v) all material contributions required to be
made by Company or any subsidiary or ERISA Affiliate to any Company Employee
Plan have been made on or before their due dates and a reasonable amount has
been accrued for contributions to each Company Employee Plan for the current
plan years; (vi) with respect to each Company Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 or ERISA has occurred; (vii) each Company Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent (other than ordinary
administrative expenses typically incurred in a termination event); (viii) all
premiums required by any Company Employee Plan have been paid thereunder or
accrued on the books of the Company; (ix) all outstanding indebtedness for
services performed or accrued vacation, holiday pay, earned
commissions, accrued bonuses or other benefits owned to any present or former
employee, consultant or director have been paid when due or accrued on the books
of the Company; and (x) no action or failure to act with respect to any Company
Employee Plan could subject Company, Surviving Corporation or Parent or any of
their respective affiliates or any Company Employee Plan to any material tax,
penalty or other liability, for breach of fiduciary duty or otherwise, under
ERISA or any other applicable law, whether by way of indemnity or otherwise.
With respect to each Company Employee Plan subject to ERISA as either an
employee pension plan within the meaning of Section 3(2) of ERISA or an employee
welfare benefit plan within the meaning of Section 3(1) of ERISA, Company has
prepared in good faith and timely filed all requisite governmental reports
(which were true and correct as of the date filed) and has properly and timely
filed and distributed or posted all notices and reports to employees required to
be filed, distributed or posted with respect to each such Company Employee Plan.
No suit, administrative proceeding, action or other litigation has been brought,
or to the best knowledge of Company is threatened, against or with respect to
any such Company Employee Plan, including any audit or inquiry by the IRS or
United States Department of Labor, and, to the knowledge of Company, there are
no facts that could give rise to
17
any liability in the event of any such suit, proceeding, action or other
litigation which reasonably could be expected to have a Material Adverse Effect.
No payment or benefit which will or may be made by Company will be characterized
as an "excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code. Neither Company nor any Company subsidiary or other ERISA Affiliate is a
party to, or has ever been a party to, or has made any contribution to or
otherwise incurred any obligation under, any "multiemployer plan" as defined in
Section 3(37) of ERISA. Neither Company nor any Company subsidiary or ERISA
Affiliate currently maintains, sponsor, participates in or contributes to, nor
has it ever maintained, established, sponsored, participated in, or contributed
to, any pension plan (within the meaning of Section 3(2) of ERISA) which is
subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or
Section 412 of the Code.
(d) With respect to each Company Employee Plan, Company and
each of its subsidiaries and ERISA Affiliates have complied with (i) the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the regulations
(including proposed regulations) thereunder, (ii) the applicable requirements of
the Family Medical and Leave Act of 1993 and the regulations thereunder, except
to the extent that any such failure to comply would not have a Material Adverse
Effect on Company and (iii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 and the regulations (including
proposed regulations) thereunder, except to the extent that any such failure to
comply would not have a Material Adverse Effect on Company.
(e) The consummation of the transactions contemplated by this
Agreement will not (either alone or when taken together with any additional or
subsequent events) (i) entitle any current or former employee or other service
provider of Company, any Company subsidiary or any other ERISA Affiliate to
severance benefits or any other payment, or (ii) accelerate the time of payment
or vesting, or increase the amount of compensation due, any such employee or
service provider under any Company Employee Plan.
(f) There has been no amendment to, or written interpretation
or announcement (whether or not written) by Company, any Company subsidiary or
other ERISA Affiliate relating to, or change in participation or coverage under,
any Company Employee Plan which would materially increase the expense of
maintaining such Plan above the level of expense incurred with respect to that
Plan for the fiscal year of the Company ended December 31, 1998.
(g) There has been no deferral of any cash or securities under
the Company Stock Option Plan.
2.15 EMPLOYEE MATTERS.
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any director, officer,
employee or other person of Company or any of its subsidiaries, (ii) materially
18
increase any benefits otherwise payable by Company or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(b) Company and each of its subsidiaries are in compliance in
all material respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice. Company and each of
its subsidiaries has withheld all material amounts required by law or by
agreement to be withheld from the wages, salaries, and other payments to
employees, and is not liable for any material arrears of wages or any material
taxes or any material penalty for failure to comply with any of the foregoing.
Company is not liable for any material payment to any trust or other fund or to
any governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending claims against
Company or any of its subsidiaries under any workers compensation plan or policy
or for long term disability. Neither Company nor any of its subsidiaries has any
obligations under COBRA with respect to any former employees or qualifying
beneficiaries thereunder, except for obligations that would not, individually or
in the aggregate, have a Material Adverse Effect on Company. There are no
controversies pending or, to the knowledge of Company, threatened between
Company or any of its subsidiaries, on the one hand, and any of their respective
employees, on the other hand, which controversies have or could reasonably be
expected to result in an action, suit, proceeding, claim, arbitration or
investigation before any agency, court or tribunal or other Governmental Entity.
Neither Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract; nor does Company know of any
activities or proceedings of any labor union to organize any such employees. To
Company's knowledge, no employees of Company are in violation in any material
respect of any term of any employment contract, patent disclosure agreement,
noncompetition agreement, or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by Company because of
the nature of the business conducted or presently proposed to be conducted by
Company or to the use of trade secrets or proprietary information of others.
Company does not have any employment agreement with any of its officers or other
employees. No employees of Company have given notice to Company, nor is Company
otherwise aware, that any such employee intends to terminate his or her
employment with Company. SCHEDULE 2.15 to the Company Disclosure Schedule sets
forth a list of employees of Company as of no earlier than September 30, 1999,
which list includes each employee's name, title (if any), department, date of
hire, current annual salary and whether such employee has executed an employment
agreement with Company.
(c) All employees of Company or any of its subsidiaries
engaged in the business of, acting as, or performing the duties of a registered
representative, registered principal or similar registered personnel or agent
(under the definition of such terms in the rules of the National Association of
Securities Dealers, Inc. ("NASD"), any SRO or any state which has jurisdiction
over Company or any of its subsidiaries (if applicable)) are properly registered
to act in the capacity of a registered representative, registered principal or
similar registered personnel or agent under the
19
rules of the NASD any SRO or any state which has jurisdiction over Company or
any of its subsidiaries (if applicable).
2.16 INTERESTED PARTY TRANSACTIONS. Neither Company nor any of its
subsidiaries is indebted to any shareholder, director, officer, employee or
agent of Company or any of its subsidiaries or any affiliates (as defined in
Section 2.21) or any family thereof (except for amounts due as normal salaries
and bonuses and in reimbursement of ordinary expenses), and no such person is
indebted to Company or any of its subsidiaries, and there is no agreement (oral
or written) or other arrangement or transaction involving or between or among
the Company or any subsidiary, on the one hand, and any shareholder, director,
officer or employee of Company or any of its subsidiaries or any affiliates or
any family thereof, on the other hand.
2.17 INSURANCE. There is no material claim pending under any of
Company's policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid when due and Company
and its subsidiaries are otherwise in compliance in all material respects with
the terms of such policies and bonds. Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies. SCHEDULE 2.17 to the Company Disclosure Schedule sets forth all
policies of insurance and bonds (including, all key man insurance policies)
owned by or as to which the Company is a beneficiary or pays all or any portion
of the premium therefor.
2.18 REGULATORY MATTERS.
(a) Other than with respect to any filings or applications as
may be required under applicable SRO or state broker-dealer laws as set forth in
the Company Disclosure Schedule, Company and each of its subsidiaries have
obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (i)
pursuant to which Company or any of its subsidiaries currently operates or holds
any interest in any of its properties or (ii) that is required for the operation
of Company's or any of its subsidiaries' business or the holding of any such
interest ((i) and (ii) herein collectively called "Company Authorizations"), and
all of such Company Authorizations are in full force and effect and subject to
no special condition(s) or restriction(s).
(b) Company and its subsidiaries have complied, and are in
compliance, in all material respects with all applicable federal, state, local
and self-regulatory laws, statutes, licensing requirements, rules, and
regulations. Each of Company and its subsidiaries has, and is in compliance
with, all governmental and SRO authorizations, consents, licenses, permits
(temporary or otherwise), orders, approvals, waivers, franchises and other
rights ("Governmental Permits") necessary to conduct their businesses,
including, but not limited to, Governmental Permits of the NASD, any state or
foreign securities or prosecutorial authority or any other Governmental Entity
required to operate their respective businesses and maintain their respective
assets. Other than with respect to any filings or applications as may be
required under applicable SRO or state broker-dealer laws as set forth in the
Company Disclosure Schedule, each of Company and its subsidiaries has obtained
all
20
Governmental Permits of any and all Governmental Entities required for the
carrying on of its business and the maintenance of its assets and such
Governmental Permits are in full force and effect, and there are no
circumstances of which Company is aware which indicate that any of such
Governmental Permits may be revoked or not renewed or withdrawn or (except to an
immaterial or beneficial extent) amended, in whole or in part. SCHEDULE 2.18 to
the Company Disclosure Schedule sets forth a true and complete list of all
Governmental Permits held by Company or any of its subsidiaries or by any
officers or employees of Company or any of its subsidiaries which is used in
connection with or necessary to conduct their respective businesses. Neither
Company nor any of its subsidiaries has received any notice from or is aware of
any Governmental Entity (i) asserting that the Company or any of its
Subsidiaries is not in compliance with any of the statutes, regulations, or
ordinances that such Governmental Entity enforces or (ii) threatening to revoke
cancel or not renew any Governmental Permit (nor, to Company's knowledge, no
grounds for any of the foregoing exist), or (iii) restricting or disqualifying
in any material respect their activities. After giving effect to the Merger all
Governmental Permits of the Surviving Corporation and its subsidiaries shall
continue to be valid and in full force and effect to the same extent as they
presently are for Company and its subsidiaries except as set forth in SCHEDULE
2.18 to the Company Disclosure Schedule. There is no order issued, investigation
or proceeding pending or (to Company's knowledge) threatened, or notice served,
with respect to any violation of any law, statute, ordinance, order, writ,
decree, rule, regulation or the like issued by any Governmental Entity
applicable to either Company or any of its subsidiaries or any of their
respective directors, officers, employees or agents.
(c) Neither Company nor any of its subsidiaries is a party or
subject to any agreement, consent decree or order or other understanding or
arrangement with, or any directive of, any Governmental Entity which imposes any
material restrictions on, or otherwise affects in any material respect, the
conduct of the business of Company or any of its subsidiaries. There are and
have not been any compliance or enforcement proceedings or, to the knowledge of
Company, examinations, inspections, investigations or inquiries convened related
thereto or any fines, sanctions or other measures imposed, by any Governmental
Entity or body against, concerning or relating to Company any of its
subsidiaries or any of their respective directors, officers, employees or
agents.
(d) Each of Company and its subsidiaries, to the extent
required to so register (the "Broker-Dealers"), is duly registered as a
broker-dealer with the SEC and under all applicable state, federal, foreign or
related laws and is a member of the NASD and a member of SIPC; it being
understood that as of the date hereof neither Company or any of its subsidiaries
has received or been paid any commissions, fees or other remuneration that it or
they would not be permitted to receive or be paid as a result of not being duly
registered. None of the Broker-Dealers has exceeded in any material respect the
business activities enumerated in any applicable restriction or membership
agreements or other limitations imposed in connection with its registrations,
forms (including, Form BDs and reports filed with the NASD or any other
Governmental Entity). The information contained in such registrations, forms and
reports was or will be true and complete in all material respects as of the date
immediately preceding Closing and, except as indicated on a subsequent
registration form or report filed before the Closing, will continue to be true
and complete in all material respects. Each such registration is in full force
and effect.
21
(e) None of the Company, its subsidiaries, or their respective
operations are required to be registered (i) as an investment adviser under the
Investment Advisers Act of 1940, as amended or under any state, federal or
foreign investment adviser or related laws or (ii) as an investment company
under the Investment Company Act of 1940, as amended.
2.19 MATERIAL CONTRACTS.
(a) Except as otherwise disclosed in the Company Disclosure
Schedule, neither Company nor any of its subsidiaries is a party to or bound by
any of the following (collectively, the "Material Contracts"):
(i) any contract or agreement for the acquisition or
sale of securities or any material portion of the assets or business of or to
any other person or entity whether completed or pending other than pursuant to
Company Options;
(ii) any contract or agreement for the purchase of
materials, supplies, equipment, services or data involving in the case of any
such contract or agreement more than fifty thousand dollars ($50,000) over the
life of the contract or agreement;
(iii) any contract, agreement or instrument that
expires or may be renewed at the option of any person other than Company or its
subsidiaries so as to expire more than six months after the date of this
Agreement, or which is not terminable by Company or a subsidiary (as applicable)
on sixty or fewer days' notice at any time without penalty, AND involves the
receipt or payment by Company or any of its subsidiaries of more than fifty
thousand dollars ($50,000) during any twelve month period;
(iv) any indenture, mortgage, note, loan agreement,
installment obligation or other contract, agreement or instrument for the
borrowing of money, any currency exchange, commodities or other hedging
arrangement, any letter of credit or any leasing transaction of the type
required to be capitalized in accordance with GAAP;
(v) any contract or agreement for capital
expenditures in excess of fifty thousand dollars ($50,000) individually or in
the aggregate with other similar contracts or agreements;
(vi) any contract or agreement limiting the freedom
of Company or any of its subsidiaries or (to the extent known to Company) any of
its officers or key employees to engage in any line of business or to compete
with any person (as that term is defined in the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) or any confidentiality, secrecy or
non-disclosure contract or agreement other than an ancillary provision included
as part of a contract or agreement entered into by Company or any of its
subsidiaries in the ordinary course of business;
(vii) any contract or agreement involving payments
during any twelve-month period of fifty thousand dollars ($50,000) or more,
pursuant to which Company or any of its
22
subsidiaries is a lessor or lessee of any real property, machinery, equipment,
motor vehicles, office furniture, fixtures or other personal property;
(viii) any material contract or agreement with any
person with whom Company or any of its subsidiaries does not deal at arm's
length within the meaning of the Code;
(ix) any agreement of guarantee, support,
indemnification, assumption or endorsement of, or any similar commitment with
respect to, the obligations, liabilities (whether accrued, absolute, contingent
or otherwise) or indebtedness of any other Person;
(x) any material consulting agreement;
(xi) any distribution, reseller, dealer, agency,
franchise, advertising, revenue sharing, marketing or similar agreement;
(xii) any clearing agency, investment banking,
placement, broker or similar agreement;
(xiii) any agreement with any Governmental Entity
(including any SRO); (xiv) any agreement to provide brokerage services or
directly or indirectly participate in brokerage activities, commissions or fees
in any manner;
(xv) any data redistribution or other agreement with
any vendor of financial market data or relating in any manner to financial
market data;
(xvi) any product and/or service warranties, price
protection or return agreement or written policy or any similar written
undertaking by or for which the Company or any of its subsidiaries remains
responsible to perform (a form of any of the foregoing will be sufficient);
(xvii) any material agreement which would be
terminable other than by Company or its subsidiaries or any agreement that
provides for the payment of money, accelerates or increases benefits, vesting or
compensation or entitles any Person to take actions or receive benefits or
otherwise triggers obligations as a result of the Merger or consummation of any
of the transactions contemplated by this Agreement not otherwise disclosed in
the Company Disclosure Schedule; or
(xviii) any other agreement which is material to the
operations of the Company's or any of its subsidiaries' businesses or operations
or which may have a material affect on the Company's assets, properties or the
Merger.
(b) Each of Company and its subsidiaries has performed all of
the material obligations required to be performed by it and is entitled to all
accrued benefits under, and is not in default, nor to the Company's knowledge
has a claim been made that it is in default, in any material respect in respect
of, each Material Contract to which it is a party or by which it is bound. Each
of
23
the Material Contracts is in full force and effect, unamended, and there
exists no material default or event of default or event, occurrence, condition
or act, with respect to Company or any of its subsidiaries or, to Company's
knowledge, with respect to any other contracting party, which, with the giving
of notice, the lapse of the time or the happening of any other event or
condition, would become a material default or event of default under any
Material Contract. There are no unwritten obligations or agreements or course of
dealings contrary in any material respect to the specific terms and provisions
of any Material Contract. True, correct and complete copies of all Material
Contracts have been delivered to Parent.
2.20 YEAR 2000 COMPLIANCE. "Year 2000 Compliant" (or, as the context
may require, "Year 2000 Compliance") means that any particular hardware or
software will: (i) meet SEC and SRO requirements; (ii) process and store date
data from at least the years 1900 through 2050, without error, interruption,
malfunction, corruption, ceasing to function, generating incorrect data or
otherwise producing incorrect results or adversely impacting current or future
operations; (iii) maintain all functionality with respect to the introduction,
processing and output of records containing dates falling on or after January 1,
2000; and (iv) support numeric and date transitions from the twentieth century
to the twenty-first century, and back (including, without limitation, all
calculations, aging, reporting, printing, displays, reversals, disaster and
vital records recoveries) without error, interruption, malfunction, corruption,
ceasing to function, generating incorrect data or otherwise producing incorrect
results or adversely impacting current or future operations.
(a) All of Company's and its subsidiaries' current products
and services and all computer software and hardware (including, without
limitation, microcode, firmware, system and application programs, files,
databases, computer services and microcontrollers, including those embedded in
computer and noncomputer equipment) contained in Company's or any of its
subsidiaries' current products or services are Year 2000 Compliant.
(b) All of Company's and its subsidiaries' internal computer
systems are Year 2000 Compliant.
(c) Company and its subsidiaries have reviewed written
certifications or other written confirmation from each of their key suppliers
and distributors of services and products that same are Year 2000 Compliant,
and, to the knowledge of Company after reasonable investigation and testing,
neither Company nor any of its subsidiaries is relying on the products or
services of any third party whose systems, products or services are not Year
2000 Compliant.
(d) Neither Company nor any of its subsidiaries has any
material expenses or other material liabilities associated with securing Year
2000 Compliance, or making contingency arrangements to address Year 2000
Compliance issues, with respect to Company's or its subsidiaries' current
products or services, internal computer systems or the computer systems of
Company's or its subsidiaries' key suppliers or customers.
2.21 COMPANY AFFILIATE AGREEMENTS. Each affiliate (as defined below) of
Company has entered into a Company Affiliate Agreement in the form attached
hereto as EXHIBIT "B" (the
24
"Company Affiliate Agreements"). For purposes of this Agreement, persons and/or
entities deemed affiliates of an entity within the meaning of Rule 144 of the
Rules and Regulations of the SEC promulgated under the Securities Act for
purposes of Accounting Series, Releases 130 and 135, as amended, of the SEC are
referred to as "affiliates." All of the affiliates of the Company are listed on
SCHEDULE 2.21 hereto.
2.22 STATE TAKEOVER STATUTES. The Board of Directors of Company has
taken all actions so that the restrictions (if any) contained in Texas Law
applicable to "control share acquisitions" shall not apply to the execution,
delivery or performance of this Agreement, the consummation of the Merger or the
other transactions contemplated by this Agreement. No other state takeover
statute or regulation is applicable to the Merger, this Agreement or the
transactions contemplated hereby or thereby.
2.23 TAX AND ACCOUNTING TREATMENT. Neither Company nor any of its
shareholders, directors or officers has taken any action that would interfere
with Parent's or the Surviving Corporation's ability to account for the Merger
as a pooling of interests or would prevent the Merger from constituting a
transaction qualifying as a reorganization within the meaning of Section 368(a)
of the Code. Neither Company nor, to Company's knowledge, any of its affiliates
or agents is aware of any agreement, plan or other circumstance that would
interfere with Parent's or the Surviving Corporation's ability to account for
the Merger as a pooling of interests or prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
2.24 BROKERS' AND FINDERS' FEES. Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby, other
than under its engagement letter with X.X. Xxxxxxx & Sons, Inc. (a true and
complete copy of which has been furnished to Parent).
2.25 NON-RELIANCE. Company, for itself and on behalf of its
shareholders, directors, officers, subsidiaries and affiliates, disclaims and
disavows any reliance whatsoever upon Xxxxxxx Xxxxx & Associates, Inc. ("Xxxxxxx
Xxxxx") or any of its officers, employees or affiliates in connection with the
Merger or the transactions contemplated under this Agreement and acknowledges
that it and they have relied solely upon their own independent investigation and
agents and legal counsel before deciding to enter into the Merger and consummate
the transaction contemplated by this Agreement.
2.26 REPRESENTATIONS COMPLETE. None of the representations or
warranties made by Company herein or in any Schedule, including in the Company
Disclosure Schedule, or certificate furnished by Company pursuant to this
Agreement, when all such documents are read together in their entirety, contains
or will contain at the Effective Time any untrue statement of a material fact,
or omits or will omit at the Effective Time to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as disclosed in the document of even date herewith delivered by
Parent to Company prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this Agreement (the "Parent
Disclosure Schedule"), any exception so disclosed in the Parent Disclosure
Schedule to specifically identify the Section of this Agreement to which such
exception relates, Parent represents and warrants to Company as follows:
3.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Parent and Merger Sub have all
requisite corporate power and authority to enter into this Agreement and the
Registration Rights Agreement (as hereinafter defined) and to consummate the
transactions contemplated hereby and thereby.
3.2 CAPITAL STRUCTURE. The authorized capital stock of Parent consists
of 100,000,000 shares of Parent Common Stock and 25,000,000 shares of Parent's
preferred stock, par value $.01 per share ("Preferred Stock"), of which there
were issued and outstanding as of the close of business on September 30, 1999,
22,463,439 shares of Parent Common Stock and no shares of Preferred Stock. There
are no other outstanding shares of capital stock or voting securities and no
outstanding commitments to issue any shares of capital stock or voting
securities after September 30, 1999 other than pursuant to the exercise of
vested options outstanding as of such date under the Company's 1996 Amended and
Restated Incentive Stock Plan, 1997 Employee Stock Purchase Plan and 1997
Nonemployee Director Stock Option Plan (collectively and as amended to date, the
"Parent Stock Plans"). All outstanding shares of Parent Common Stock are duly
authorized, validly issued, fully paid and non-assessable and are free and clear
of any liens or encumbrances other than any liens or encumbrances created by or
imposed upon the holders thereof, and are not subject to preemptive rights or
rights of first refusal created by statute, the articles of incorporation or
bylaws, each as amended, of Parent or any agreement to which Parent is a party
or by which it is bound. As of the close of business on September 30, 1999,
Parent had reserved an aggregate of 5,175,000 shares of Common Stock for
issuance to employees, consultants and directors pursuant to the Parent Stock
Plans, of which 225,331 shares have been issued pursuant to option exercises and
3,262,275 shares are subject to outstanding, unexercised options (excluding any
options to purchase shares of Parent Common Stock under the 1997 Employee Stock
Purchase Plan, as amended). Parent has not issued or granted any Stock purchase
rights or awards, stock appreciation rights or performance units under the
Parent Stock Plans or otherwise. Except for (i) the rights created pursuant to
this Agreement and the Parent Stock Plans and agreements issued pursuant or
under the Parent Stock Plans, there are no other options, warrants, calls,
rights, commitments or agreements of any character to which Parent is a party or
by which it is bound obligating Parent to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of capital stock of Parent or obligating Parent to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. There
26
are no contracts, commitments or agreements relating to voting, purchase or sale
of Parent's capital stock (i) between or among Parent and any of its
stockholders and (ii) to the best of Parent's knowledge, between or among any of
Parent's stockholders. All outstanding shares of Parent Common Stock and all
options to purchase Parent Common Stock were issued in compliance with all
applicable federal and state securities laws.
3.3 AUTHORITY. The execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub, as applicable. Each of
this Agreement and the Registration Rights Agreement has been duly executed and
delivered by Parent and Merger Sub, as applicable, and constitutes the valid and
binding obligations of Parent and Merger Sub, enforceable against them in
accordance with its terms, except as such enforcement may be limited by (i) the
effect of bankruptcy, insolvency, reorganization, receivership, conservatorship,
arrangement, moratorium or other laws affecting or relating to the rights of
creditors generally, or (ii) the rules governing the availability of specific
performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity
or at law. The execution and delivery of this Agreement and the Registration
Rights Agreement do not, and the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a benefit under (i) any provision of the articles of incorporation or
bylaws of Parent or Merger Sub, as amended, or (ii) any material mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or Merger Sub or their respective properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Parent or Merger Sub in connection with the execution and delivery of
this Agreement or the Registration Rights Agreement by Parent and Merger Sub or
the consummation by Parent and Merger Sub of the transactions contemplated
hereby or thereby, except for (i) the filing of the Articles of Merger as
provided in Section 1.2 hereof, (ii) the filing with the SEC and the NASD of a
registration statement on Form S-3 and the declaration of the effectiveness of
such registration statement (as and to the extent amended), (iii) the filing of
a Form 8-K with the SEC and the NASD, (iv) any filings or applications as may be
required under applicable federal, SRO or state securities laws, (v) the filing
with The Nasdaq National Market of a Notification Form for Listing of Additional
Shares with respect to the shares of Parent Common Stock issuable upon
conversion of the Company Common Stock in the Merger and upon exercise of the
options under the Company Stock Option Plan assumed by Parent, (vi) the filing
of a registration statement on Form S-8 with the SEC or other applicable form
covering the shares of Parent Common Stock issuable pursuant to the outstanding
Company Options assumed by Parent, and (vii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on Parent and would not prevent
or materially alter or delay any of the transactions contemplated by this
Agreement or the Registration Rights Agreement.
27
3.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. Parent has made available
(including via XXXXX) to Company each statement, report, registration statement
(with the prospectus in the form filed pursuant to Rule 424(b) of the Securities
Act), definitive proxy statement, and other filings filed with the SEC by Parent
since September 30, 1997 (collectively, the "Parent SEC Documents"). In
addition, Parent has made or will make (as the case may be) available (including
via XXXXX) to Company all exhibits to the Parent SEC Documents which are filed
prior to the Effective Time. As of their respective filing dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the Securities Act, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected by a subsequently filed Parent SEC Document. The
financial statements of Parent, including the notes thereto, included in the
Parent SEC Documents (the "Parent Financial Statements") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with GAAP applied on a
basis consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Parent Financial Statements fairly present the consolidated
financial condition and operating results of Parent and its subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments).
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. Parent has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
consolidated balance sheet of Parent and its subsidiaries or in the related
notes to the consolidated financial statements included in Parent's Annual
Report on Form 10-K for the period ended December 31, 1998 (the "Parent Balance
Sheet Date"), (ii) those disclosed in Parent SEC Documents filed subsequent to
the Parent Balance Sheet Date, and (iii) those incurred in the ordinary course
of business consistent with past practice since the Parent Balance Sheet Date
and which have not had and are not reasonably likely to have a Material Adverse
Effect on Parent.
3.6 ABSENCE OF CERTAIN CHANGES. Since the Parent Balance Sheet Date,
other than (i) those disclosed in Parent SEC Documents filed subsequent to the
Parent Balance Sheet Date and (ii) those matters which had not had and are not
reasonably likely to have a Material Adverse Effect, Parent has conducted its
business in the ordinary course consistent with past practice and there has not
occurred: (i) any change, event or condition (whether or not covered by
insurance) that has resulted in, or might reasonably be expected to result in, a
Material Adverse Effect on Parent; (ii) any acquisition, sale or transfer of any
material asset of Parent or any of its subsidiaries other than in the ordinary
course of business and consistent with past practice; (iii) any change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by Parent or any revaluation by Parent of any of
its or any of its subsidiaries' assets; (iv) any declaration, setting aside, or
payment of a dividend or other distribution with respect to the shares
28
of Parent, or any direct or indirect redemption, purchase or other acquisition
by Parent of any of its shares of capital stock; (v) any amendment or change to
the articles of incorporation or bylaws of Parent; (vi) any material change in
the interest rate risk management and hedging policies, procedures or practices
of Parent or any of its subsidiaries, or any failure to comply with such
policies, procedures and practices; or (vii) any agreement by Parent or any of
its subsidiaries to do any of the things described in the preceding clauses (i)
through (vi) (other than negotiations with Company and its representatives
regarding the transactions contemplated by this Agreement).
3.7 LITIGATION. There is no judgment, decree or order against Parent
or, to the knowledge of Parent, any of its respective directors or officers (in
their capacities as such) that could prevent, enjoin, alter or materially delay
any of the transactions contemplated by this Agreement.
3.8 TAX TREATMENT. Neither Parent nor any of its directors or officers
has taken any action that would prevent the Merger from constituting a
transaction qualifying as a reorganization within the meaning of Section 368(a)
of the Code. Neither Parent nor, to Parent's knowledge, any of its affiliates or
agents is aware of any agreement, plan or other circumstance that would prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
3.9 BROKER'S AND FINDERS' FEES. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby, other
than the fees and expenses of Xxxxxxx Xxxxx (which will be borne by Parent).
3.10 NON-RELIANCE. Parent, for itself and on behalf of its
shareholders, directors, officers, subsidiaries and affiliates, disclaims and
disavows any reliance whatsoever upon X.X. Xxxxxxx & Sons, Inc. ("X.X. Xxxxxxx")
or any of its officers, employees or affiliates in connection with the Merger or
the transactions contemplated under this Agreement and acknowledges that it and
they have relied solely upon their own independent investigation and agents and
legal counsel before deciding to enter into the Merger and consummate the
transaction contemplated by this Agreement.
3.11 REPRESENTATIONS COMPLETE. None of the representations or
warranties made by Parent and Merger Sub herein or in any Schedule hereto,
including the Parent Disclosure Schedule, or certificate furnished by Parent
pursuant to this Agreement, or the Parent SEC Documents, when all such documents
are read together in their entirety, contains or will contain at the Effective
Time any untrue statement of a material fact, or omits or will omit at the
Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Company
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agrees (except to the extent expressly contemplated by this Agreement or as
consented to in writing by Parent), to carry on its and its subsidiaries'
business in the ordinary course in substantially the same manner as heretofore
conducted, to pay and to cause its subsidiaries to pay debts and Taxes when due
subject to good faith disputes over such debts or Taxes, to pay or perform other
obligations when due, and to use reasonable efforts consistent with past
practice and policies to preserve intact its and its subsidiaries' present
business organizations, keep available the services of its and its subsidiaries'
present officers and employees and preserve its and its subsidiaries'
relationships with customers, suppliers, data and other distributors, licensors,
licensees, SROs, Governmental Entities and others having business dealings with
it or its subsidiaries, to the end that its and its subsidiaries' goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Each of Company
and Parent agrees to promptly notify the other of any event or occurrence not in
the ordinary course of its or its subsidiaries' business, and of any event which
could have a Material Adverse Effect on it or any of its subsidiaries.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 ACCESS TO INFORMATION.
(a) At all times prior to the Effective Time, Company shall
afford Parent and its accountants, counsel and other representatives, reasonable
access during normal business hours to (i) all of Company's and its
subsidiaries' assets, properties, facilities, books, contracts, commitments,
records and employees, (ii) all Tax Returns and work papers and all other
information relating to Taxes of Company and its subsidiaries, and (iii) all
other information concerning the business, properties and personnel of Company
and its subsidiaries as Parent may reasonably request. Company agrees to provide
to Parent and its accountants, counsel and other representatives copies of
internal financial statements, budgets, operating plans and projections promptly
upon request.
(b) No information or knowledge obtained in any investigation
pursuant to this Section 5.1 or otherwise shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.2 PUBLIC DISCLOSURE. Unless otherwise permitted by this Agreement,
Parent and Company shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public
disclosure (whether or not in response to an inquiry) regarding the terms of
this Agreement or any of the transactions contemplated hereby, and neither shall
issue any such press release or make any such statement or disclosure without
the prior approval of the other (which approval shall not be unreasonably
withheld or delayed), except as may be required by law (including securities
laws) or by obligations pursuant to any listing agreement or other requirements
of or with the NASD, in which case the party proposing to issue such press
release or make such public statement or disclosure shall reasonably attempt to
consult with the other party before issuing such press release or making such
public statement or disclosure.
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5.3 CONSENTS; COOPERATION. Each of Parent, Merger Sub and Company will,
and will cause their respective subsidiaries to, take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorization of, or any registration, declaration or filing
with, any Governmental Entity or other person required to be obtained or made in
connection with the taking of any action contemplated by this Agreement. In the
event an injunction or other order shall have been issued which prevents, alters
or delays the Merger or any other transaction contemplated hereby, each party
agrees to use its reasonable best efforts to have such injunction or other order
lifted. Without limiting the foregoing, each of Parent and Company shall use its
reasonable best efforts to obtain all necessary consents, waivers and approvals
under any of its material contracts in connection with the Merger for the
assignment thereof or otherwise. As soon as practicable, Parent and Company
shall file all necessary forms and take all necessary actions, and thereafter
shall use its reasonable best efforts, to file any required notice or
application regarding the change of control or ownership of Company and its
subsidiaries from the NASD and any applicable state and all other notices,
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities and parties to contracts, agreements, licenses
or other instruments relating to the business as may be required in order to
enable each of Parent and Company, respectively, to perform its obligations
hereunder and so as to permit the Closing to occur at the earliest possible
date.
5.4 REASONABLE BEST EFFORTS AND FURTHER ASSURANCES. Each of the parties
to this Agreement shall use its reasonable best efforts to effect the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to Closing under this Agreement. Each party hereto, at the reasonable
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
5.5 BLUE SKY LAWS. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the shares of Parent Common Stock in connection
with the Merger. Company shall use its best efforts to assist Parent as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of the shares of Parent
Common Stock in connection with the Merger.
5.6 LISTING OF ADDITIONAL SHARES. Immediately after the Effective Time,
Parent shall file with The Nasdaq National Market a Notification Form for
Listing of Additional Shares with respect to the shares of Parent Common Stock
issuable upon conversion of the Company Common Stock in the Merger and upon
exercise of the Company Options assumed by Parent.
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5.7 POOLING ACCOUNTING. Parent and Company shall each use its best
efforts to cause the business combination to be effected by the Merger to be
accounted for as a pooling of interests under GAAP and applicable SEC rules and
regulations. Each of Parent and Company shall use its reasonable best efforts to
cause its Affiliates not to take any action that would adversely affect the
ability of Parent or the Surviving Corporation to account for the business
combination to be effected by the Merger as a pooling of interests. At all times
at and following the Effective Time, Parent may impose stop transfer
instructions or elect to not permit the transfer of shares of Parent Common
Stock or the issuance of a new certificate representing such shares unless and
until such a transfer can be made without adversely affecting the ability of
Parent or the Surviving Corporation to account for the business combination to
be effected by the Merger as a pooling of interests.
5.8 AFFILIATE AGREEMENTS. Company shall provide Parent with such
information and documents as Parent shall reasonably request for purposes of
reviewing such list. Company shall deliver or cause to be delivered to Parent,
concurrently with the execution of this Agreement, from each of the Affiliates
of Company an executed Company Affiliate Agreement in the form of EXHIBIT "B"
hereto. Parent and Merger Sub shall be entitled to place appropriate legends on
the certificates evidencing shares of Parent Common Stock to be received by such
Affiliates of Company pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for Parent Common
Stock, in each of the foregoing cases in accordance with the terms of such
Company Affiliate Agreement.
5.9 TAX TREATMENT. The parties shall use their reasonable best efforts
to cause the Merger to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code.
5.10 COMPANY OPTIONS. At the Effective Time, the Company Stock Option
Plan and each Company Option, whether vested or unvested, will be assumed by
Parent. Company represents and warrants to Parent that SCHEDULE 5.10 hereto sets
forth a true and complete list as of the date hereof of all holders of
outstanding Company Options, including the number of shares of Company Common
Stock subject to each such Company Option, the exercise or vesting schedule
(including any accelerated vesting provisions), the exercise price per share and
the term of each such Company Option. Each such Company Option so assumed by
Parent under this Agreement shall continue to have, and be subject to, the same
terms and conditions set forth in the Company Stock Option Plan and/or the
applicable stock option agreements immediately prior to the Effective Time,
except that (i) such Company Option will be exercisable for that number of whole
shares of Parent Common Stock equal to the product of the number of shares of
Company Common Stock that were issuable upon exercise of such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio and
rounded down to the nearest whole number of shares of Parent Common Stock, and
(ii) the per share exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed Company Option will be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such Company Option was exercisable immediately prior to the Effective
Time by the Exchange Ratio, rounded up to the nearest whole cent, subject to any
adjustments necessary to protect the status of any Company Option as an
incentive stock option as defined in Section 422 of the Code (if applicable).
It is the intention of the
32
parties that the Company Options so assumed by Parent qualify, to the maximum
extent permissible following the Effective Time, as incentive stock options as
defined in Section 422 of the Code to the extent such Company Options qualified
as incentive stock options prior to the Effective Time. Within 30 business days
after the Effective Time, Parent will issue to each person who, immediately
prior to the Effective Time, was a holder of an outstanding Company Option a
document evidencing the foregoing assumption of such Company Option by Parent.
5.11 FORM S-8. Parent agrees to use its reasonable best efforts to file
as soon as practicable after the Effective Time (and in any event no later than
thirty (30) business days after the Effective Time), a registration statement on
Form S-8 covering the shares of Parent Common Stock issuable pursuant to
outstanding Company Options assumed by Parent. Company shall cooperate with and
assist Parent in the preparation of such registration statement.
5.12 AGREEMENT REGARDING EMPLOYMENT; NON-COMPETITION AGREEMENT.
(a) On or prior to the Closing Date, Company shall cause each
of the individuals set forth on SCHEDULE 5.12(A) to have delivered to Parent an
executed Agreement Regarding Employment in the form of EXHIBIT "C" attached
hereto.
(b) On or prior to the Closing Date, Company shall cause each
of the shareholders of Company set forth on SCHEDULE 5.12(B) to have delivered
to Parent an executed Shareholder Non-Competition and Non-Disclosure Agreement
(the "Non-Competition Agreement") in the form of EXHIBIT "D" attached hereto.
5.13 DIRECTOR AND OFFICER INDEMNIFICATION. Parent agrees not to cause
or allow the Surviving Corporation to modify any rights to indemnification or
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the officers and directors of Company
and its subsidiaries as provided in their respective certificates or articles of
incorporation or by-laws and any indemnification agreements of Company.
5.14 SHAREHOLDER LITIGATION. Company shall give Parent the opportunity
to participate in or, in the event Parent is named in any such litigation, to
lead, in each case at its own expense, in the defense of any shareholder
litigation against the Company and/or its directors relating to the transactions
contemplated by this Agreement.
5.15 STOCK OPTION AGREEMENTS. As soon as practicable after the
Effective Time, Parent shall deliver to each of the individuals set forth on
SCHEDULE 5.15 a Stock Option Agreement in the form of EXHIBIT "E" attached
hereto for all individuals on Schedule 5.15 except Xxxx X. Xxxxxxxx and T. Xxxxx
Xxxxx and in the form of EXHIBIT "E-1" for each of Xxxx X. Xxxxxxxx and T. Xxxxx
Xxxxx, covering the number of stock options to purchase Parent Common Stock set
forth next to such individuals name on SCHEDULE 5.15, having as the "Date of
Grant" the date of the Effective Time and at an exercise price equal to the fair
market value of Parent Common Stock on the "Date of Grant" as determined under
and in accordance with Parent's Amended and Restated 1996 Incentive Stock Plan,
as amended.
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5.16 INVESTMENT ACKNOWLEDGMENT AGREEMENT. On or prior to the Closing
Date, Company shall cause each of the shareholders of Company set forth on
SCHEDULE 5.16 to deliver to Parent an executed Investment Acknowledgment
Agreement in the form of EXHIBIT "F" attached hereto.
5.17 REGISTRATION RIGHTS AGREEMENT. Concurrently with the closing of
this Agreement, Parent, Company and the shareholders of Company shall enter into
a Registration Rights Agreement in the form of EXHIBIT "G" attached hereto.
5.18 COMPANY INDEBTEDNESS. Concurrently with the closing of this
Agreement, Parent shall pay in full the indebtedness of Company listed on
SCHEDULE 5.18 in the outstanding principal amounts set forth on such SCHEDULE
5.18, together with any accrued and unpaid interest which is not then
delinquent, which payment of such indebtedness as heretofore indicated Company
represents and warrants shall satisfy all such indebtedness in full.
Concurrently with Parent's payment of such indebtedness, Company shall cause to
be delivered to Parent (a) a satisfaction in full or other instrument
acknowledging the payment in full of such indebtedness from each holder thereof,
(b) UCC-3 termination statements from each holder terminating any UCC financing
statements filed in connection with such indebtedness and (c) a release and/or
reassignment of any and all right, title and interest of the holders of such
indebtedness with respect to those certain key-man life insurance policies
issued by Jefferson-Pilot Life Insurance Company insuring the lives of each of
Xxxx X. Xxxxxxxx and T. Xxxxx Xxxxx in the amount of $2,000,000.
5.19 OBSERVATION RIGHTS. Xxxx Xxxxxxxx and T. Xxxxx Xxxxx shall be
entitled to attend as observers all meetings of the Board of Directors of Parent
(including telephonic meetings); provided, however, that (a) Parent's Board of
Directors may require that such individuals not attend any particular Board
meeting or be excused from any portions of meetings that involve matters or
business that Parent's Board of Directors, in its reasonable discretion,
determine involve matters or business necessary to be considered by the Board of
Directors without Messrs. Xxxxxxxx and Black being in attendance; and (b) such
rights shall exist for each individual only for so long as such individual owns
at least 1.5% of the outstanding shares of Parent Common Stock. Except with
respect to matters or business as to which Parent's Board of Directors has
determined should be considered by the Board of Directors without Messrs.
Xxxxxxxx and Black being in attendance and for so long as each individual is
entitled to attend Board meetings, such individual shall be provided with the
same meeting notices and materials as the members of Parent's Board of
Directors, including but not limited to copies of all proposed and final
resolutions, minutes and written consents.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Effective
Time of the following condition, which may be waived, in writing, by agreement
of all the parties hereto:
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(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, seeking any of the foregoing be
pending; nor shall there be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Merger, which
prevents or prohibits the consummation of the Merger. In the event an injunction
or other order shall have been issued, each party agrees to use its commercially
reasonable efforts to have such injunction or other order lifted.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligations of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Effective Time of each of the following conditions, any of
which may be waived, in writing, by Company:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of Parent in this Agreement shall be true and
correct in all material respects (except that those representations and
warranties that are qualified by their terms by a reference to materiality or
Material Adverse Effect shall be true and correct in all respects) when made on
and as of the Effective Time as though such representations and warranties were
made on and as of such time (other than representations and warranties expressly
relating to and made as of an earlier date, which shall have been true and
correct as of such earlier date) and (ii) Parent and Merger Sub shall have
performed and complied in all material respects with all covenants, agreements,
obligations and conditions of this Agreement required to be performed and
complied with by them at or prior to the Effective Time.
(b) CERTIFICATE OF PARENT. Company shall have been provided
with a certificate executed on behalf of Parent by its President and its Chief
Financial Officer certifying that the condition set forth in Section 6.2(a) has
been fulfilled.
(c) NO MATERIAL ADVERSE EFFECT. There shall not have occurred
any Material Adverse Effect as to Parent and, its subsidiaries, taken as a
whole.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, by Parent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of Company in this Agreement shall be true and
correct in all material respects (except that those representations and
warranties that are qualified by their terms by a reference to materiality or
Material Adverse Effect shall be true and correct in all respects) when made on
and as of the Effective Time as though such representations and warranties were
made on and as of such time (other than representations and warranties expressly
relating to and made as of an earlier date) and (ii) Company shall have
performed and complied in all material respects with all covenants,
35
agreements, obligations and conditions of this Agreement required to be
performed and complied with by it at or prior to the Effective Time.
(b) CERTIFICATE OF COMPANY. Parent shall have been provided
with a certificate executed on behalf of Company by its President and Chief
Financial Officer certifying that the condition set forth in Section 6.3(a) has
been fulfilled.
(c) THIRD PARTY CONSENTS. Parent shall have been furnished
with evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with the Merger under
any Material Contract of Company or any of its subsidiaries or otherwise.
(d) GOVERNMENTAL APPROVAL. Parent shall have been furnished
with evidence satisfactory to it that Parent, Company and Merger Sub and their
respective subsidiaries have obtained from each Governmental Entity (other than
the NASD) all approvals, waivers and consents, if any, necessary for
consummation of or in connection with the Merger and the other transactions
contemplated hereby.
(e) INJUNCTIONS OR RESTRAINTS ON CONDUCT OF BUSINESS. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Parent's conduct or operation of the
business of Company and its subsidiaries following the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission, SRO or other Governmental Entity seeking the foregoing be pending.
(f) NO MATERIAL ADVERSE EFFECT. There shall not have occurred
any Material Adverse Effect as to Company and its subsidiaries, taken as a
whole.
(g) COMPANY AFFILIATE AGREEMENTS. Parent shall have received
from each Affiliate of Company an executed Company Affiliate Agreement.
(h) AGREEMENT REGARDING EMPLOYMENT AND NON-COMPETITION
AGREEMENT. Each of the employees of Company set forth on SCHEDULE 5.12(A) shall
have continued employment with the Surviving Corporation and shall have entered
into an Agreement Regarding Employment in the form attached hereto as EXHIBIT
"C." Each of the shareholders of Company set forth on SCHEDULE 5.12(B) shall
have entered into a Non-Competition Agreement substantially in the form attached
hereto as EXHIBIT "D."
(i) POOLING LETTERS. Parent shall have received letters, each
dated the Closing Date, from Xxxxxx Xxxxxxxx LLP, Parent's independent auditors,
and PriceWaterhouseCoopers LLP, Company's independent auditors, to the effect
that the Merger qualifies for pooling of interests accounting treatment if
consummated in accordance with this Agreement.
36
(j) OPINION OF COMPANY COUNSEL. Parent shall have received an
opinion, dated the Closing Date, addressed to Parent from Company's counsel,
Jenkens & Xxxxxxxxx, PC, in form and substance reasonably satisfactory to
Parent, as to the matters and to the effect set forth on EXHIBIT "H" attached
hereto.
(k) DISSENTING SHARES. The aggregate number of Dissenting
Shares shall not equal more than 3% of the outstanding shares of Company Common
Stock.
ARTICLE VII
EXPENSES, AMENDMENT AND WAIVER
7.1 EXPENSES. If the Merger is consummated all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its advisers,
brokers, finders, agents, accountants and legal counsel) shall be paid by either
Company or Parent, as applicable.
7.2 AMENDMENT. The boards of directors of the parties hereto may cause
this Agreement to be amended at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto; provided that an
amendment made subsequent to adoption of the Agreement by the shareholders of
Company or Merger Sub shall not without the approval of the shareholders of
Company and Merger Sub (i) alter or change the amount or kind of consideration
to be received on conversion of the Company Common Stock, or (ii) alter or
change any of the terms and conditions of the Agreement if such alteration or
change would materially adversely affect the holders of Company Common Stock or
Merger Sub Common Stock.
7.3 EXTENSION; WAIVER. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL AT EFFECTIVE TIME. The representations, warranties and
agreements set forth in this Agreement shall terminate at the Effective Time,
except that the agreements set forth in Article I, Sections 5.4 (Reasonable Best
Efforts and Further Assurances), 5.6 (Listing of Additional Shares), 5.10
(Company Options), 5.11 (Form S-8), 5.13 (Director and Officer Indemnification),
5.15 (Stock Option Agreements), 5.19 (Observation Rights), 7.1 (Expenses), 7.2
(Amendment), and this Article VIII shall survive the Effective Time.
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8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Merger Sub, to:
Omega Research, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Bilzin Xxxxxxx Xxxx Price & Xxxxxxx LLP
2500 First Union Financial Center
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Company, to:
Window On WallStreet Inc.
0000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxx,
Chief Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000 x 000
with a copy to:
Jenkens & Xxxxxxxxx, PC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
8.3 INTERPRETATION. When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be
38
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof", and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to the
date set forth in the first paragraph of this Agreement. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Company Disclosure Schedule and the Parent Disclosure
Schedule, (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for that certain confidentiality agreement dated July 6, 1999
from Parent to and accepted on behalf of Company and that certain mutual
nondisclosure agreement dated as of September 30, 1999 between Parent and
Company, which shall continue in full force and effect, and shall survive any
termination of this Agreement or the Closing, in accordance with its terms; (b)
are not intended to confer upon any other person any rights or remedies
hereunder, except as set forth in Sections 1.6(a), (c), (d), (f), (h) and (i)
(Effect on Capital Stock), 1.7 (Surrender of Certificates), 5.6 (Listing of
Additional Shares), 5.10 (Company Options), 5.11 (Form S-8), 5.13 (Director and
Officer Indemnification), Section 5.15 (Stock Option Agreements) and Section
5.19 (Observation Rights); and (c) shall not be assigned by operation of law or
otherwise except as otherwise specifically provided.
8.6 SEVERABILITY. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void, invalid or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such illegal, void, invalid or unenforceable provision of this
Agreement with a legal, valid and enforceable provision that will achieve, to
the extent possible, the economic, business and other purposes of such illegal,
void, invalid or unenforceable provision.
8.7 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
39
8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without reference to such
state's principles of conflicts of law, except as mandatorily governed by Texas
law. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any court located within Miami-Dade County in the State of
Florida in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Florida for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 DEFINITIONS. For purposes of this Agreement, (a) "Material Adverse
Effect" means any event, change, condition or effect that is, or could be
reasonably expected to be, materially adverse to the condition (financial or
otherwise), properties, assets (including, without limitation, Intellectual
Property and other intangible assets), liabilities, business, operations or
results of operations of such person or entity and its subsidiaries, taken as a
whole; provided, however, that in no event shall a decrease in such person's or
entity's stock price in and of itself be considered a "Material Adverse Effect,"
(b) "subsidiary" means, with respect to a party, any corporation, partnership,
limited liability company or other organization or entity, whether incorporated
or unincorporated, in which such party has, directly or indirectly, a fifty
percent (50%) or greater interest and (c) any reference to a party's "knowledge"
means such party's actual knowledge after reasonable inquiry of officers,
directors and other employees of such party charged with senior administrative
or operational responsibility for such matters.
8.11 DISPUTES. In the event of a dispute hereunder or relating to the
transactions contemplated hereby, including under or with respect to any of the
agreements to be executed and delivered pursuant hereto, the prevailing party in
such dispute shall be entitled to recover from the other party all of its costs
and expenses incurred in connection with the enforcement of its rights hereunder
or thereunder, including reasonable attorneys' and paralegals' fees and costs
incurred before and at trial, at any other proceeding, at all tribunal levels
and whether or not suit or any other proceeding is brought.
[SIGNATURE PAGE IS NEXT PAGE]
40
IN WITNESS WHEREOF, Company, Parent and Merger Sub have caused this
Agreement and Plan of Merger to be executed and delivered by their respective
officers thereunto duly authorized, all as of the date first written above.
WINDOW ON WALLSTREET INC.
By: /s/ XXXX X. XXXXXXXX
---------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
OMEGA RESEARCH, INC.
By: /s/ XXXXX X. XXXX
---------------------------
Name: Xxxxx X. Xxxx
Title: Co-Chief Executive Officer
WOW ACQUISITION CORPORATION
By: /s/ XXXXX X. XXXX
---------------------------
Name: Xxxxx X. Xxxx
Title: Co-Chief Executive Officer
41
SCHEDULE 2.21
AFFILIATES OF COMPANY
Xxxx X. Xxxxxxxx
T. Xxxxx Xxxxx
Xxxx Xxxxx
SCHEDULE 5.10
Company Options
Each option is equivalent to one share of Company Common Stock.
NAME # OF STRIKE XXXXX XXXX VEST DATE VESTED VESTED VESTED
OPTIONS PRICE DATE PERIOD 12/31/1997* 12/31/1998* 9/30/1999*
FYE 1995
Asghar Afghani 92,000 0.10 01/12/1995 3 01/11/1998 84,333 92,000 92,000
Xxxx Xxxxx 17,600 0.10 06/12/1995 4 06/11/1999 11,000 15,400 17,600
Xxxx Xxxxx 4,000 0.10 12/15/1995 4 12/14/1999 2,000 3,000 4,000
FYE 1996
Xxxxx Xxxxxx 262,800 0.10 03/06/1996 3 03/06/1999 160,600 248,200 262,800
Xxxxx X. Xxxxx 16,000 0.10 04/15/1996 4 04/14/2000 7,000 11,000 14,000
Xxxx Xxxxx 112,347 1.70 09/01/1996 4 08/31/2000 37,449 65,536 86,601
Xxxx Xxxxx 4,000 1.70 12/01/1996 4 11/30/2000 1,083 2,083 2,833
FYE 1997
Xxxxx Xxxxxxxx 6,000 1.70 01/25/1997 4 01/24/2001 1,375 2,875 4,000
Xxxxx Xxxxxxxx 10,000 1.70 04/16/1997 4 04/15/2001 1,250 3,750 5,625
Xxxxx X. Xxxxx 12,000 1.70 08/01/1997 4 07/31/2001 1,250 4,250 6,500
Xxxxx Ge 12,000 1.70 08/01/1997 4 07/31/2001 1,250 4,250 6,500
Xxxx Xxxxxx 4,000 1.70 08/01/1997 4 07/31/2001 417 1,417 2,167
Xxxxxxx Xxxxxxx 4,000 1.70 08/01/1997 4 07/31/2001 417 1,417 2,167
Xxxxxxxxx Xxxxxx 1,500 1.70 12/04/1997 4 12/03/2001 31 406 688
Xxxxxx Xxxxxxx 1,500 1.70 12/04/1997 4 12/03/2001 31 406 688
Xxxx X. Xxxxxxxxx 10,000 1.70 12/01/1997 4 11/30/2001 208 2,708 4,503
FYE 1998
Xxxxx Xxxx 500 1.70 05/18/1998 4 05/17/2002 - 73 167
Xx X. Xxxxx 5,000 1.70 07/01/1998 4 06/30/2002 - 625 1,563
Xxxxxxxxx X.
Xxxxxx 5,000 1.70 07/01/1998 4 06/30/2002 - 625 1,563
Xxxxxx X. Xxxxxxxx 10,000 1.70 07/01/1998 4 06/30/2002 - 1,250 3,125
Xxxxx X. Xxxxx 10,000 1.70 07/01/1998 4 06/30/2002 - 1,250 3,125
Qingdong Ge 7,000 1.70 07/01/1998 4 06/30/2002 - 875 2,188
SCHEDULE 5.10
Company Options
NAME # OF STRIKE XXXXX XXXX VEST DATE VESTED VESTED VESTED
OPTIONS PRICE DATE PERIOD 12/31/1997* 12/31/1998* 9/30/1999*
Xxxxxx X. Xxxxx 7,000 1.70 07/01/1998 4 06/30/2002 - 875 2,188
Xxxxxx Xxxxxxx 5,000 1.70 07/01/1998 4 06/30/2002 - 625 1,563
Xxxxxxx X.
Xxxxxxx 4,000 1.70 07/01/1998 4 06/30/2002 - 500 1,250
Xxxxx X. Xxxxx 2,000 1.70 07/01/1998 4 06/30/2002 - 250 625
Xxxx X. Xxxxxx 4,000 1.70 07/01/1998 4 06/30/2002 - 500 1,250
Xxxxx X. Xxxxxxxx 2,000 1.70 07/01/1998 4 06/30/2002 - 250 625
Xxxx Xxxxx 92,600 1.70 12/04/1998 4 12/03/2002 - - 17,363
Xxxxxx X. Xxxxx 10,000 1.70 12/01/1998 4 11/30/2002 - - 1,875
Xxxxxxxx Xxxxx 5,000 1.70 09/25/1998 4 09/24/2002 - 313 1,250
Xxxxxx Xxxxxxx 5,000 1.70 09/25/1998 4 09/24/2002 - 313 1,250
FYE 1999
Xxxxx X. XxXxxxxx 7,000 1.70 03/01/1999 4 02/28/2003 - - 729
Xxxxx Xxxxx 5,000 1.70 04/01/1999 4 03/31/2003 - - 521
Xxxxxxx Xxxxxx 2,000 1.70 04/01/1999 4 03/31/2003 - - 167
Xxxxxxx X.
Xxxxxxx 3,000 1.70 04/22/1999 4 04/21/2003 - - 250
Xxxx Xxxx 2,500 1.70 04/22/1999 4 04/21/2003 - - 208
Xxxx X. Xxxxxx 5,000 1.70 06/04/1999 4 06/03/2003 - - 313
Xxxxxx Xxxxxx 5,000 1.70 06/04/1999 4 06/03/2003 - - 313
Xx Xxxxx 5,000 1.70 06/04/1999 4 06/03/2003 - - 313
Xxxx Xxxxx 2,500 1.70 04/22/1999 4 04/21/2003 - - 208
Xxxxxx X. Xxxxxxxx 20,000 1.70 01/15/1999 4 01/14/2003 - - 3,333
Xxxx Xxxxx 5,000 1.70 10/22/1999 4 10/21/2003 - -
Xxx Xxxx 20,000 1.70 08/10/1999 4 08/09/2003 - - 417
Xxxxxxxx Xxxxx 4,000 1.70 05/10/1999 4 05/09/2003 - - 333
Xxxxxxxxx Xxxxxx 10,000 1.70 05/15/1999 4 05/14/2003 - - 833
Minji Li 2,500 1.70 06/25/1999 4 06/24/2003 - - 313
Xxxxxxxx Xxxxxxx 8,000 1.70 06/28/1999 4 06/27/2003 - - 1,000
SCHEDULE 5.10
Company Options
NAME # OF STRIKE XXXXX XXXX VEST DATE VESTED VESTED VESTED
OPTIONS PRICE DATE PERIOD 12/31/1997* 12/31/1998* 9/30/1999*
Xxxxx Xxxxx 10,000 1.70 07/16/1999 4 07/15/2003 - - 000
Xxxxxxx X. Xxxxxxx 5,000 1.70 08/30/1999 4 08/29/2003 - - 104
* The vesting schedules were prepared using Generally Accepted Accounting
Principles, and do not reflect the actual number of options vested. The Stock
Option Agreements specify that for Stock Options with a three-year vest period,
33% vests on the first anniversary date of the grant, 33% on the Second
Anniversary date, and 34% on the third anniversary date. For Stock Options with
a four-year vest period, 25% vests on the first anniversary date of the grant,
with an additional 25% vesting each year on the anniversary date thereof until
full vesting occurs on the fourth anniversary date.
SCHEDULE 5.12 (A)
INDIVIDUALS TO EXECUTE AGREEMENT REGARDING EMPLOYMENT:
Xxxx X. Xxxxxxxx
T. Xxxxx Xxxxx
Xxxxx Xxxxxx
Xxxx Xxxxx
SCHEDULE 5.12 (B)
SHAREHOLDERS OF COMPANY TO EXECUTE NON-COMPETITION AGREEMENT:
Xxxx X. Xxxxxxxx
T. Xxxxx Xxxxx
Ashgar Afghani
Xxxxx Xxxxxx
Xxxx Xxxxx
Xxxxx Trojan
SCHEDULE 5.15
PARENT STOCK OPTION GRANTS
OPTIONS TO PURCHASE
NUMBER OF SHARES OF
GRANTEE PARENT COMMON STOCK
------- -------------------
Xxxx X. Xxxxxxxx 75,000
T. Xxxxx Xxxxx 75,000
Xxxxxxxx Xxxxxxx 5,000
Ashgar Afghani 10,000
Xxxxxxx Xxxxxxx 3,500
Xx Xxxxx 2,000
Xxxxx Xxxxxxxx 6,000
Xxxxx XxXxxxxx 5,000
Xxxxx Xxxxxx 15,000
Xxxxxx Xxxxx 1,000
Don Moire 10,000
Xxxx Xxxx 1,000
Xxxxxxxx Xxxxx 3,500
Xxxx Xxxxx 2,000
Xxx Xxxxxxxx 1,000
Xxxxx Xxxxx 4,000
Xxx Xxxxx 15,000
Xxx Xxxxxxx 1,000
Xxxx Xxxxxxxxx 5,000
Xxxxx Xxxxxxx 1,000
Xxxxxxxx XxXxxxx 1,000
Xxxxx Xxxxxxxxxxxx 1,000
Xxxx Xxxxxx 1,500
Xxxxxxx Xxxxxxxx 500
Xxxxxx XX 3,500
Xxx Xxxxxxx 4,000
Qingdong GE 10,000
Xxxxxx Xxxxxxx 6,000
Xxxxxxx Xxxxx 500
Xxxx X. Xxxxx 20,000
Xxxxxxxxx Xxxxxx 15,000
Xxxxx Xxxxxxxx 20,000
Xxxxxx Xxxxxx 1,000
-------
TOTAL 325,000
=======
SCHEDULE 5.16
SHAREHOLDERS OF COMPANY EXECUTING INVESTMENT ACKNOWLEDGMENT AGREEMENT:
Xxxx X. Xxxxxxxx
T. Xxxxx Xxxxx
Xxxxxxx Xxxxx
Ashgar Afghani
Xxxx Xxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxx
Xxxx Xxxxx
Xxxxx Trojan
SCHEDULE 5.18
COMPANY INDEBTEDNESS
OUTSTANDING PRINCIPAL ACCRUED INTEREST PAYABLE
HOLDER OF INDEBTEDNESS AMOUNT AS OF CLOSING DATE AS OF CLOSING DATE
---------------------- ------------------------- ------------------------
Red Oak Capital $3,851,176.38 $214,546.18
Xxxxx Trojan $17,777.80 $990.41
EXHIBIT "A"
ARTICLES OF MERGER
MERGING
WOW ACQUISITION CORPORATION
INTO
WINDOW ON WALLSTREET INC.
Pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act, the undersigned entities adopt the following Articles of
Merger:
1. NAMES AND JURISDICTION OF PARTIES. The names of the constituent
entities and the states under the laws of which they are respectively organized
are:
WOW Acquisition Corporation, a Texas corporation (the "Merged
Corporation") Window on WallStreet Inc., a Texas corporation (the
"Surviving Corporation")
2. APPROVAL OF PLAN OF MERGER. An Agreement and Plan of Merger (the
"Plan of Merger") was approved by the shareholders of Merged Corporation and by
the shareholders of Surviving Corporation and was duly authorized by all action
required by the laws of the State of Texas and by their respective constituent
documents.
3. SURVIVING ENTITY. Pursuant to the Plan of Merger, Merged Corporation
will merge with and into Surviving Corporation (the "Merger") and the surviving
entity will be Surviving Corporation.
4. CERTIFICATE OF INCORPORATION. The Articles of Incorporation of
Merged Corporation currently on file with the Secretary of State of Texas (a
copy of which is attached hereto as Exhibit "A") shall continue in effect after
the Merger and no amendment to such Articles of Incorporation is intended to be
effected by the Plan of Merger except that ARTICLE ONE of such Articles of
Incorporation shall be amended to read as follows:
"The name of the corporation (the "Corporation") is Window on
WallStreet Inc."
5. OPERATIVE DOCUMENT. The Plan of Merger is on file at the place of
business of Surviving Corporation and is available for inspection at the
following address:
0000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000.
A copy of the Plan of Merger will be furnished by Surviving Corporation on
request and without cost to any shareholder of Merged Corporation or Surviving
Corporation or any other person holding an interest in any other business entity
which is a party to the Plan of Merger.
6. As to each of the undersigned corporations, the number of shares
outstanding, all of which are designated as common stock and none of which are
entitled to vote as a separate class, and entitled to vote on such Plan of
Merger are as follows:
NAME OF CORPORATION NUMBER OF SHARES OUTSTANDING
------------------- ----------------------------
WOW Acquisition Corporation 100
Window on WallStreet Inc. 9,479,845
7. As to each of the undersigned corporations, the total number of
shares voted for and against such Plan of Merger, respectively, are as follows:
NAME OF CORPORATION TOTAL VOTED FOR TOTAL VOTED AGAINST
------------------- --------------- -------------------
WOW Acquisition Corporation 100 0
Window on WallStreet Inc. 9,479,845 0
8. The Surviving Corporation will be responsible for payment of all
fees and franchise taxes of the Surviving Corporation and the Merger Corporation
and will be obligated to pay such fees and franchise taxes if the same are not
timely paid.
[Signatures are on the following page]
-2-
October 25, 1999.
WOW ACQUISITION CORPORATION
By:
----------------------------------------
Name: Xxxxxxx X. Xxxx
Its: Co-Chief Executive Officer
WINDOW ON WALLSTREET INC.
By:
----------------------------------------
Name: Xxxx X. Xxxxxxxx
Its: Chief Executive Officer
-3-
EXHIBIT "B"
COMPANY AFFILIATE AGREEMENT
October 25,1999
Omega Research, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Pursuant to the terms of an Agreement and Plan of Merger dated as of
October 25, 1999 (the "Merger Agreement"), by and among Omega Research, Inc., a
Florida corporation ("Parent"), WOW Acquisition Corporation, a Texas corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), and Window On WallStreet
Inc., a Texas corporation ("Company"), Parent has agreed to acquire Company
through the merger of Merger Sub with and into Company (the "Transaction").
The undersigned has been advised that as of the date hereof the
undersigned may be deemed to be an "affiliate" of Company, as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule 145 of
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "SEC") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), and/or (ii) used in and for purposes of
Accounting Series Releases 130, 135 and 146 and Staff Accounting Bulletin Two,
as amended, of the SEC.
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, other shareholders of
Parent, Merger Sub, Company and their respective counsel and accounting firms
and are being given to induce Parent and Merger Sub to enter into the Merger
Agreement and to consummate the Merger and the other transactions contemplated
under the Merger Agreement. Except to the extent written notification to the
contrary is received by Parent from the undersigned prior to the consummation of
the Transaction, the representations and warranties contained herein shall be
accurate at all times from the date hereof through the Effective Time (as
defined in the Merger Agreement).
The undersigned hereby represents and warrants to and agrees with
Parent that in the event the undersigned receives any shares of Parent Common
Stock as a result of the Transaction:
1. The undersigned has power and authority to execute and deliver this
letter agreement and to make the representations and warranties set forth herein
and to perform his obligations hereunder;
2. The undersigned has carefully read this letter agreement and the
Merger Agreement and, to the extent the undersigned felt necessary, discussed
the requirements of such documents and other applicable limitations upon his
ability to sell, transfer, pledge or otherwise dispose of Parent Common Stock
with his counsel or counsel for the Company;
3. The undersigned is the owner of the number of shares of Parent
Common Stock (the
"Shares") set forth below, and did not acquire any of the Shares in
contemplation of the Transaction.
4. The undersigned will not make any sale, transfer, pledge or other
disposition of Parent Common Stock (i) in violation of the Securities Act or the
Rules and Regulations or (ii) to a transferee that has not agreed in writing to
be bound hereby;
5. The undersigned has been advised that the issuance of Parent Common
Stock to the undersigned in connection with the Transaction will not be
registered at the Closing Date with the SEC under the Securities Act on a
Registration Statement on Form S-4. Furthermore, the undersigned has also been
advised that, since at the time the Transaction was or will be submitted for a
vote or consent of the shareholders of the Company the undersigned may be deemed
to be or have been an affiliate of the Company and the distribution by the
undersigned of any Parent Common Stock has not as yet been registered under the
Securities Act, the undersigned may not sell, transfer or otherwise dispose of
Parent Common Stock issued to him in the Transaction unless (i) such sale,
transfer, or other disposition by the undersigned has been registered under the
Securities Act, (ii) such sale, transfer, or other disposition is made in
conformity with the one year holding period, volume and other limitations of
Rules 144 and 145 or (iii) in the opinion of counsel reasonably acceptable to
Parent, such sale, transfer, or other disposition is otherwise exempt from
registration under the Securities Act;
6. The undersigned understands that, except as provided in the Merger
Agreement or Registration Rights Agreement to be executed and delivered in
connection with the Merger Agreement, Parent is under no obligation to register
the sale, transfer, or other disposition of Parent Common Stock by the
undersigned or on his behalf under the Securities Act or to take any other
action necessary in order to make compliance with an exemption from such
registration available;
7. The undersigned also understands that stop transfer instructions
will be given to Parent's transfer agent with respect to Parent Common Stock
issued to him and that there will be placed on the certificates for Parent
Common Stock issued to him, or any substitutions therefor, a legend stating in
substance:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR EVIDENCE REASONABLY SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATIONS ARE NOT REQUIRED. FURTHERMORE, THE SECURITIES
REPRESENTED HEREBY WERE ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED,
APPLIES. THE SECURITIES REPRESENTED HEREBY MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED OCTOBER __, 1999
BETWEEN THE REGISTERED HOLDER HEREOF AND OMEGA
2
RESEARCH, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF OMEGA RESEARCH, INC.";
8. The undersigned also understands that, unless the sale, transfer, or
other disposition by him of Parent Common Stock issued to him has been
registered under the Securities Act or is a sale made in conformity with the
provisions of Rules 144 and 145, Parent reserves the right to put the following
legend on the certificates issued to any transferee of the undersigned:
"THE SECURITIES REPRESENTED HEREBY WERE ACQUIRED FROM A PERSON
WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULES 144 AND 145
PROMULGATED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED,
APPLY, AND WERE NOT ACQUIRED BY THE HOLDER WITH A VIEW TO TRANSFER, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF, UNLESS SUCH SALE,
TRANSFER, OR OTHER DISPOSAL IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER.";
9. Any other provisions of this letter agreement to the contrary
notwithstanding, except as set forth below, during the 30-day period immediately
preceding the Effective Time, the undersigned has not engaged and will not
engage, and after the Effective Time until such time as results covering at
least 30 days of combined operations of the Company and Parent have been
published by Parent, in the form of a quarterly earnings report, an effective
registration statement filed with the SEC, a report to the SEC on Form 10-K,
10-Q, or 8-K, or any other public filing or announcement which includes such
combined results of operations (the period commencing 30 days prior to the
Effective Time and ending on the date of the publication of the post-Transaction
financial results is referred to herein as the "Pooling Period"), the
undersigned will not engage in any sale, transfer, or other disposition of, or
reduce the undersigned's risk in respect of, any of the following:
(a) any shares of Parent Common Stock which the undersigned
may acquire in connection with the Transaction, or any securities which
may be paid as a dividend or otherwise distributed thereon or with
respect thereto or issued or delivered in exchange or substitution
therefore (all such shares and other securities being referred to
herein, collectively, as "Restricted Securities"), or any option, right
or other interest with respect to any Restricted Securities;
3
(b) the shares of Company Common Stock and options or warrants
to purchase Company Common Stock beneficially owned by the undersigned;
or
(c) any shares of Company Common Stock or any other equity
securities of the Company which the undersigned purchases or otherwise
acquires after the execution of this letter agreement.
10. As promptly as practicable after the Effective Time, Parent will
publish results covering at least 30 days of combined operations of the Company
and Parent in the form of a quarterly earnings report, an effective registration
statement filed with the SEC, a report to the SEC on Form 10-K, 10-Q, 8-K, or
any other public filing or announcement which includes such combined results of
operations; PROVIDED, HOWEVER, that Parent will under no circumstance be
obligated to publish such results earlier than that time at which Parent is
required to file with the SEC a report on Form 10-K or Form 10-Q (as the case
may be) for and covering its first full fiscal quarter during which such 30 days
of combined operations occurs.
11. The undersigned agrees that, at any time and from time to time
hereafter (including after the Effective Time) the undersigned (a) will take any
and all lawful acts and actions and execute and deliver any and all documents as
reasonably requested by Parent, Company, Merger Sub or the Surviving Corporation
(i) to carry out, or accomplish the purposes and intent of, the Merger and the
Merger Agreement and the covenants and agreements of Company thereunder, (ii) to
vest the Surviving Corporation with full right, title and possession to all of
the assets, property, rights, licenses, benefits, privileges, powers and
franchises of Company and (iii) to assist in obtaining all of the consents and
approvals required in connection with the Merger and the Merger Agreement and
the other transactions contemplated thereunder (even if not obtained prior to
the Effective Time or waived by Parent in order to close the Merger and the
other transactions contemplated under the Merger Agreement on the Closing Date),
and (b) will not take any action or omit to take any action which is
inconsistent with the Merger Agreement or purposes and intent thereof or the
agreements and covenants of Company thereunder, would cause the representations
and warranties of Company to be inaccurate or untrue in any material respect or
would adversely effect the Merger qualifying as a "reorganization" under the
provisions of Sections 368 (a)(1)(A) and 368 (a)(2)(E) of the Code and as a
pooling of interests for financial accounting purposes.
4
12. This Company Affiliate Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the Sate of Florida without
giving effect to the principles of conflicts of laws thereof and may be executed
in counterparts.
Very truly yours,
-------------------------------------------
-------------------------------------------
(print name)
Number of Shares beneficially owned as of
the date hereof:
-----------------------
Accepted as of October 25, 1999
OMEGA RESEARCH, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
5
EXHIBIT "C"
AGREEMENT REGARDING EMPLOYMENT
This AGREEMENT, effective as of October 25, 1999, is by and between
WINDOW ON WALLSTREET INC., a Texas corporation ("Employer"),
and__________________ ("Employee").
PRELIMINARY STATEMENT
1. This Agreement covers various subjects, including (i) protection of
Employer's trade secrets and confidential information, (ii) non-solicitation of
Employer's customers, licensees, independent contractors, consultants and
employees, (iii) restrictions on Employee's ability to compete with Employer or
participate in competitive businesses both during and after Employee's
employment, (iv) ownership of work product developed in whole or in part by
Employee, (v) misuse of trade secrets or confidential information belonging to
others and interference with rights of others, (vi) the full-time, exclusive
nature of Employee's employment commitment, and (vii) unfair business practices.
Each of these subjects is equally important, and if Employee accepts employment
or continued employment with Employer, Employee is agreeing to faithfully and
fully observe all covenants and agreements set forth below relating to each
subject addressed, without exception.
2. Employee has been informed by Employer, and understands, that (a)
Employer has developed and owns, as a result of substantial effort and expense
on the part of Employer, valuable trade secrets and other valuable confidential
business information to which Employee has and/or will have substantial access,
(b) Employee has developed and/or will be developing important and substantial
relationships with other valuable employees of Employer and/or with certain of
Employer's customers, licensees, independent contractors, consultants, strategic
partners, vendors and/or other third parties having dealings or contractual
relationships with Employer, and (c) Employer has devoted and/or will be
devoting substantial efforts and expense to train Employee to perform Employee's
employment duties, which has resulted (or, if this is a new employment, assuming
it continues, will likely result) in the development by Employee of specialized
and valuable skills, knowledge and abilities.
3. In light of all of the foregoing, in order to protect Employer's
legitimate business interests, including its goodwill with its customers,
licensees, independent contractors, consultants, strategic partners, vendors,
other third parties having dealings or contractual relationships with Employer,
and other employees and Employer's trade secrets, and as a condition to
Employee's employment with Employer (or, if Employee is already employed by
Employer, as a condition to Employer agreeing to continue to employ Employee),
Employee has agreed to make for the benefit of Employer the reasonable covenants
and agreements set forth below. As an employee of Employer, Employee agrees to
observe all of the provisions of this Agreement, as well as all other rules and
policies that Employer may announce from time to time.
NOW, THEREFORE, it is agreed as follows:
1. POSITION AND COMPENSATION
Employee will be employed in the position and at the annual
base salary described in the attached Schedule A, which may be changed or
modified hereafter from time to time.
2. BENEFITS
Employee will be offered all group benefits, if any, made
available by Employer to its employees generally and to employees in similar
positions as Employee, and Employee will be eligible to be considered for
bonuses, all of which are subject to change by Employer at any time and from
time to time.
3. CONTINUED EMPLOYMENT OF EMPLOYEE
(a) TERM OF EMPLOYMENT. The term of employment hereunder shall
commence on the date hereof and shall end on the day preceding the first
anniversary date1 hereof (the "Employment Term"). After the expiration of the
Employment Term unless extended in writing by mutual agreement of the parties
hereto, the employment relationship thereafter will continue as employment "at
will" and, accordingly after the expiration of the Employment Term, Employee and
Employer will be each free to terminate such employment relationship at any
time, for any reason, with or without notice or cause. During the Employment
Term, Employee may terminate employment under this Agreement at any time upon at
least 60 days' prior written notice to Employer. Employer may terminate
Employee's employment under this Agreement at any time, without prior notice,
for "due cause" upon the good faith determination by the Board of Directors of
Employer (the "Board") or a Chief Executive Officer ("CEO") or Co-Chief
Executive Officer ("Co-CEO") of Omega Research, Inc., the parent of Employer,
that "due cause" exists for the termination of the employment relationship. The
term "due cause" shall mean any of the following events: (i) any intentional
misapplication by Employee of Employer's funds or any fraud committed by
Employee upon Employer; or (ii) Employee's conviction of a crime involving moral
turpitude or a felony, or (iii) Employee's breach, non-performance or
non-observance of the terms of this Agreement which is not cured (if curable)
within ten (10) days of Employee's receipt of written notice thereof; or (iv)
any other action by Employee involving willful and deliberate malfeasance or
gross negligence in the performance of Employee's duties, responsibilities and
agreements. During the Employment Term, Employer may also terminate the
employment of Employee other than for "due cause" provided that in such event
Employee shall be entitled to receive the remaining base salary payments due
hereunder for the remainder of the Employment Term, but in no event less than
three months' base salary. In the event of such termination for other than "due
cause," all other rights and benefits Employee may have under the employee
and/or executive benefit plans and arrangements of Employer generally shall be
determined in accordance with the terms and conditions of such plans and
arrangements. The parties acknowledge and agree that during the Employment Term,
Employer shall not (i) decrease Employee's annual base salary, (ii) materially
diminish Employee's duties and responsibilities or (iii) require Employee to
relocate on a full time basis from Dallas, Texas.
--------
1second anniversary date with respect to the Employment Agreement of
Xxxx Xxxxx.
2
(b) CHANGE IN CONTROL. Notwithstanding anything to the contrary
contained in this Agreement, if a "Change in Control" (as defined below) of
Employer occurs and, during the Employment Term Employee's duties and
responsibilities are materially diminished or Employee is required to relocate
on a full time basis from Dallas, Texas, Employee may terminate employment upon
30 days prior written notice to Employer and shall be entitled to receive the
remaining base salary payments due hereunder for the remainder of the Employment
Term, but in no event less than three months' base salary, payable in a lump sum
within 30 days after the date of termination. For the purposes of this
Agreement, the term "Change in Control" of Employer shall be defined as and
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended)
becomes the beneficial owner (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended) directly or indirectly of
securities of Employer representing 50% or more of the combined voting power of
Employer's then outstanding securities, (ii) the Board ceases to consist of a
majority of Continuing Directors (as defined below) or (iii) a person (as
defined in clause (i) above) acquires (or, during the 12-month period ending on
the date for the most recent acquisition by such person or group of persons, has
acquired) gross assets of Employer that have an aggregate market value greater
than or equal to over 50% of the fair market value of all of the gross assets of
Employer immediately prior to such acquisition or acquisitions. For purposes of
this Agreement, a "Continuing Director" shall mean a member of the Board who
either (i) is a member of the Board immediately after the effective time of the
merger in connection with which this Agreement is being executed and delivered
or (ii) is nominated or appointed to serve as a director by a majority of
Continuing Directors (including those nominated or appointed pursuant to this
clause (ii)) prior to such acquisition or acquisitions.
4. EMPLOYMENT AS SOLE OCCUPATION
Employee agrees to devote Employee's full business time, attention,
skill and effort exclusively to the duties that Employer assigns to Employee
from time to time. Employee agrees that Employee may not engage in any business
activities or render any services of a business, commercial or professional
nature, whether or not for compensation, for the benefit of anyone other than
Employer, unless Employer has given its consent in writing in advance; provided,
however, that this Section shall not preclude Employee from (i) engaging in any
activities that are solely personal or social in nature or (ii) serving on
boards of directors of not-for-profit organizations,2 and, in all events, that
are not a source of secondary income and will not impede the performance of his
duties and responsibilities hereunder.
5. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
(a) CONFIDENTIAL INFORMATION. Employee acknowledges that Employee
has been informed by Employer that it is Employer's policy and the policy of its
parent company and affiliates
--------
2Subsection (ii) applies solely with respect to the Agreement of Xxxxx.
3
(hereinafter "the Companies") to maintain as secret and confidential all
information and materials (whether or not stamped or marked "Confidential" or
bearing some other indicia of confidentiality) relating to (i) the financial
condition, operations and business interests, objectives, plans and strategies
of the Companies, (ii) the systems, know-how, records, products, product plans,
product designs, marketing plans, specifications, drawings, product development,
services, cost information, inventions, computer programs, technology, marketing
and sales strategies, techniques and/or programs, formulae, methods,
methodologies, manuals, customer lists and other trade secrets from time to time
acquired, sold, developed, maintained and/or used by the Companies, (iii) the
nature and terms of the Companies' relationships with their customers,
licensees, suppliers, lenders, underwriters, vendors, consultants, independent
contractors, strategic partners, other third parties having dealings or
contractual relationships with the Companies, attorneys, accountants and
employees, and (iv) any proposed public or private offering of the Companies
(all such information and materials are collectively referred to as
"Confidential Information").
(b) PROHIBITED DISCLOSURE. Employee agrees that Employee will not
directly or indirectly at any time (including after the date on which Employee's
employment terminates) divulge or disclose for any purpose (except as
specifically authorized by the Companies) to any persons, firms, corporations or
other entities (collectively, "Third Parties"), or use or cause or authorize any
Third Parties to use, any such Confidential Information, except in the capacity
of an employee of Employer pursuant to any duties in the course and scope of his
employment. "Confidential Information" does not include information that, at the
time of disclosure, is part of the public domain or is generally known in the
Companies' respective industries without the fault or carelessness of Employee,
or information which Employee can demonstrate was known to or developed by
Employee prior to the date of Employee's commencement of employment with any of
the Companies without reliance upon or use of Confidential Information. If
Employee is required by order of a court or other governmental or
self-regulating authority to disclose any Confidential Information, Employee
shall immediately notify Employer so that Employer and/or the other Companies
may attempt to obtain an appropriate protective order, and, in all events,
Employee shall only disclose the portion of the Confidential Information
required by such order to be disclosed.
(c) EMPLOYER'S MATERIALS. Employee further agrees that (i) Employee
will at no time transfer, electronically transmit or remove from the premises of
Employer any products, prototypes, drawings, designs, specifications, notebooks,
software programs or disks, tapes or similar containers of software, e-mail,
manuals, data, books, records, materials or documents of any kind or description
containing Confidential Information for any purpose unconnected with the strict
performance of Employee's duties with Employer, and (ii) upon the termination of
Employee's employment with Employer for any reason, Employee shall immediately
deliver or cause to be delivered to Employer any and all such drawings, designs,
specifications, notebooks, software programs or disks, tapes or similar
containers of software, e-mail, manuals, data, books, records, materials and
other documents and materials (and all copies thereof) in Employee's possession
or under Employee's control relating to any Confidential Information or any
other materials which are the property of Employer.
4
(d) EMPLOYEE'S ACKNOWLEDGMENT. Employee acknowledges that Employee
is aware that Employee may be subject to severe criminal penalties (including
fines and lengthy imprisonment) under both federal and state law, including
Title 18, Sections 1831, et. seq. of the United States Code (The Economic
Espionage Act of 1996) and Texas Penal Code Section 31.05 ET SEQ., as well as
substantial personal civil liability, for (i) stealing, or without Employer's
permission, taking, misappropriating or concealing, or by fraud or deception
procuring, trade secrets, as defined therein, or (ii) without Employer's
permission, receiving, possessing, altering, destroying, copying, sending,
downloading, uploading or conveying trade secrets. Employee further acknowledges
that any person or entity to whom trade secrets are given by Employee may also
become subject to severe criminal penalties and civil liability.
6. COVENANT-NOT-TO-COMPETE
(a) COVENANT-NOT-TO-COMPETE. Employee covenants and agrees that,
during Employee's employment with Employer and for a period of twelve (12)
months after the date Employee ceases for any reason to be employed by Employer,
Employee shall not, directly or indirectly (as defined below) in any capacity,
(i) market, sell, provide or license, or be involved in the marketing, sale,
provision or licensing of, any Financial Market Data Software Products or
Software-Related Services (as defined below) to any person or entity who is or
was a distributor, retailer, reseller, licensee, subscriber, or customer of
Employer at any time during Employee's employment with Employer and for or to
whom Employer has performed such services or sold or licensed such products at
any time during the one-year period ending on Employee's termination of
employment, or (ii) engage or participate in any venture, enterprise, activity
or business which involves the sale, licensing, performance or provision of
Financial Market Data Software Products or Software-Related Services, in whole
or in part via electronic commerce, telemarketing, telecommunication, cable, the
Web or the Internet, anywhere within the world. "Financial Market Data Software
Products or Software-Related Services" means (A) software products and/or
services which (1) collect or deliver financial market data (including but not
limited to stocks, bonds, options, futures, commodities, other securities and/or
fundamental company data), and/or (2) supply financial data to support online
investing and trading, including in the form of financial Web sites and
communities, and Internet-delivered streaming market data services; and/or (3)
are or can be used to make, review or devise investment analyses or strategies,
including, without limitation, charting, technical analysis and/or trading or
investment strategy design, testing and/or automation and/or (B) securities
brokerage services (including, without limitation, in connection with revenue
sharing arrangements) and services and products ancillary to any such securities
brokerage services.3 Employee acknowledges that the business of Employer is
international in scope, that, due to the electronic and telephonic nature of
Employer's business and the nature of Employer's licensees and customers, one
could effectively compete with such business from nearly anywhere in the world,
and that, therefore, such geographical area of restriction is reasonable in the
circumstances to protect Employer's trade secrets and other legitimate business
interests.
--------
3 Subsection (B) not applicable with respect to the Employment
Agreement of Xxxxx Xxxxxx.
5
(b) DEFINITION OF "DIRECTLY OR INDIRECTLY." For purposes of Section
6(a), "directly or indirectly" means to engage or participate in any venture,
enterprise, activity or business which is materially involved (as hereinafter
defined) in the marketing, selling, licensing or provision of Financial Market
Data Software Products or Software-Related Services, passively (except for
passive investments in publicly-traded companies) or actively, as a sole
proprietor or owner, director, officer, shareholder, partner, member,
consultant, independent contractor, advisor, participant, employee or agent or
in any other manner. For purposes hereof, "materially involved" means that the
venture, enterprise, activity or business directly or indirectly or together
with any of its subsidiaries, affiliates or partners or through strategic
alliances or any specific division or business unit of any such venture,
enterprise, activity or business either (1) derives in any year 5%4 or more of
its gross revenue from Financial Market Data Software Products or
Software-Related Services or (2) incurs in any year 5%4 or more of its expenses
(operating and/or capital) in connection with or as a result of Financial Market
Data Software Products or Software-Related Services.
(c) PAYMENT FOR COVENANT-NOT-TO-COMPETE. Employer and Employee both
believe that, due to the specialized nature of Employer's business, it would not
be difficult for Employee, upon termination of Employee's employment, to find
gainful employment or have other business pursuits which are not violative of
the restrictions set forth above, as there are several industries and lines of
business in which Employee could work which are dissimilar to, and not
competitive with, Employer's business. However, Employer understands that such
restrictions may limit Employee's new employment options following a termination
of Employee's employment with Employer. Accordingly, if following termination of
employment with Employer, Employee is offered a position which, if accepted,
would violate the restrictive covenants set forth above, Employer will either
(i) consent to Employee accepting employment restricted by subsection (a) above,
or (ii) not consent, but pay Employee additional consideration for Employee
remaining bound by such restrictions. In order to receive the benefit of these
provisions, Employee must be and remain in compliance with all provisions of
this Agreement, and must comply with the following procedures. Upon Employee's
receipt of a written offer of employment which Employee desires to accept and
which, if accepted, would constitute a violation of subsection (a) above,
Employee shall promptly notify Employer of such offer and provide to Employer a
copy thereof together with a written statement explaining in reasonable detail
Employee's job responsibilities at the new employment. Within ten (10) days
following the date that Employer has been given a copy of such offer and written
statement, Employer will notify Employee that either (x) Employer consents to
Employee accepting such new employment (but such consent shall extend only to
the job responsibilities described in the written statement and shall not under
any circumstances authorize Employee to disclose or use any Confidential
Information or to fail to comply with any other provision of this Agreement), or
(y) Employee may not accept the new employment. If Employer decides that
Employee may not accept the new employment, Employer shall pay to Employee each
--------
4 10% with respect to the Employment Agreement of Xxxx Xxxxx.
6
month an amount equal to 1/24th of Employee's annual base salary in effect at
the date of termination of Employee's employment less applicable federal and
state withholding ("Additional Monthly Payments"). Such Additional Monthly
Payments will cease at the end of the 12th month following the date of
Employee's termination of employment, provided that, if Employee commences other
full-time employment during such 12-month period, such Additional Monthly
Payments shall cease upon the commencement of such new employment. Employee
shall promptly notify Employer if Employee accepts any such new employment. If
Employee fails to notify Employer of new full-time employment and continues to
accept Additional Monthly Payments from Employer after commencing new full-time
employment, Employee shall be obligated to repay to Employer all Additional
Monthly Payments received from Employer pursuant to these provisions.
7. NON-SOLICITATION AGREEMENT
(a) NON-SOLICITATION OF OTHER PERSONNEL. Employee acknowledges that
Employer devotes substantial time, effort and expense to the recruitment,
selection, training, development and promotion of talented individuals for
positions of significant responsibility with Employer. Employee further
acknowledges that it would be unfair to use Employee's familiarity with
Employer's business and other employees and Employer's independent contractors
and consultants to participate, directly or indirectly, in any activities
designed to cause any of Employer's other employees to leave Employer's employ
or to cause any of Employer's independent contractors or consultants to cease
performing services for Employer. Accordingly, Employee covenants and agrees
that, during Employee's employment with Employer and for a period of eighteen
(18) months after the date Employee ceases for any reason to be employed by
Employer, Employee shall not, directly or indirectly, solicit the services of or
recruit, whether on Employee's own behalf or on behalf of others, any of the
following types of employees, independent contractors or consultants of
Employer: (i) executives, managers, supervisors or department directors; (ii)
technicians, engineers, programmers or information services workers (whether
employees, independent contractors or consultants); (iii) product, project or
task managers or supervisors (whether employees, independent contractors or
consultants); (iv) sales, marketing or public relations personnel or
consultants; (v) financial or accounting services personnel or consultants; (vi)
legal personnel; (vii) customer support personnel or consultants; or (viii)
human resources personnel; provided, however, that such provision does not apply
to Employee's attorneys, accountants, investment partners and other professional
advisors; or otherwise persuade or cause, or attempt to persuade or cause, any
such employee, independent contractor or consultant to leave Employer's employ
or cease performing services for Employer.
(b) DAMAGES FOR BREACH. Employee acknowledges that breach or
violation of this covenant would cause substantial damages to Employer. Employee
agrees that, in the event of a breach or violation of this covenant of
non-solicitation, Employee will be liable to compensate Employer for all
damages, including, without limitation, consequential damages, not limited to
lost profits, expense incurred to replace the employee or business relationship,
finder's fees, sign-on bonuses, and compensation, remuneration and/or benefits
premiums paid to employees, independent contractors and consultants to secure
their services or to replace the lost business relationship(s).
7
The payment of such damages shall not limit, impair or diminish Employer's right
to seek and obtain (x) any appropriate equitable relief (including but not
limited to specific performance, temporary restraining order and temporary and
permanent injunction), (y) other monetary relief, and other relief, at law or in
equity, for other causes of action which may have resulted from Employee's
breach or violation (such as intentional interference with contractual or
business relations in the event an employee is solicited by Employee for a
competitive position and such employee is subject to a covenant-not-to-compete),
or (z) monetary and other relief, at law or in equity, from or against persons
or entities other than Employee.
8. EMPLOYER'S REMEDIES FOR BREACH OF SECTIONS 5, 6 AND 7
In addition to the remedies referred to in Section 7(b) above,
Employee agrees that if Employee breaches or violates any of Employee's
covenants or agreements in Sections 5, 6 and 7 hereof, Employer shall be
entitled to an accounting and repayment of any and all profits, compensation,
commissions, payments and benefits which Employee directly or indirectly has
realized and realizes as a result of, or in connection with, any such breach or
violation. In addition, in the event of a breach or violation or threatened or
imminent breach or violation of any provisions of Sections 5, 6 and 7 hereof,
Employer shall be entitled to a temporary and permanent injunction or any other
appropriate decree of specific performance or equitable relief (without, unless
otherwise required by statute, being required to post bond or other security)
from a court of competent jurisdiction in order to prevent, prohibit or restrain
any such breach or violation or threatened or imminent breach or violation by
Employee. Employer shall be entitled to such injunctive or other equitable
relief in addition to any ascertainable damages which are suffered. It is
understood that resort by Employer to such injunctive or other equitable relief
shall not be deemed to waive or to limit in any respect any other rights or
remedies which Employer may have with respect to such breach or violation.
9. REASONABLENESS OF RESTRICTIONS
(a) REASONABLENESS. Employee acknowledges that any breach or
violation of Sections 5, 6 and 7 hereof will likely cause irreparable injury and
damage to Employer and that it would be very difficult or impossible to measure
all of the damages resulting from any such breach or violation. Employee further
acknowledges that Employee has carefully read and considered the provisions of
Sections 5, 6 and 7 hereof and, having done so, agrees that the restrictions and
remedies set forth in such Sections (including the time period, geographical
limits and scope of activity restricted) are fair and reasonable and do not
impose a greater restraint than is necessary for the protection of the trade
secrets, goodwill and other legitimate business interests of Employer.
(b) SEVERABILITY. Employee understands and intends that each
provision and restriction agreed to by Employee in Sections 5, 6 and 7 hereof be
construed as separate and divisible from every other provision and restriction.
In the event that any one of the provisions of, or restrictions in, Sections 5,
6 and 7 hereof shall be held to be invalid or unenforceable, and is not reformed
by a court of competent jurisdiction (which a court, in lieu of striking a
provision entirely,
8
is urged by the parties to do), the remaining provisions and restrictions shall
continue to be valid and enforceable as though the invalid or unenforceable
provision or restriction had not been included. In the event that any such
provision relating to time period, geographical limits or scope of activity
restricted (collectively "Limitations") shall be declared by a court of
competent jurisdiction to exceed the maximum or permissible Limitations such
court deems reasonable and enforceable, Limitations shall be deemed to become
and shall then be the maximum Limitations which such court deems reasonable and
enforceable.
(c) SURVIVABILITY. The restrictions, acknowledgments, covenants and
agreements of Employee set forth in Sections 5, 6, 7, 8, 9 and 10 of this
Agreement and Sections 14, 15, 16, 17 and 18 of this Agreement shall survive any
termination of Employee's employment (for any or no reason, including expiration
of the Employment Term).
10. OWNERSHIP OF WORK DEVELOPED IN WHOLE OR IN PART BY EMPLOYEE.
Employee covenants and agrees with Employer that any and all
formulae, devices, patterns, know-how, technology, computer programs,
documentation, processes, lists, compilations, literature, inventions,
methodologies, techniques and other work product ("Work") created or developed
in whole or in part by Employee (whether alone or in cooperation with others)
during the term of Employee's employment, if created or developed in whole or in
part (i) on Employer's premises, or (ii) during Employee's normal working hours,
or (iii) with the use of Employer's resources, or (iv) based upon Employee's
access to or knowledge of Confidential Information, no matter what such Work
relates to or is about, shall immediately be disclosed by Employee to Employer
and is and shall be solely Employer's property. Employee further covenants and
agrees with Employer that any Work created or developed in whole or in part by
Employee (whether alone or in cooperation with others) during the term of
Employee's employment, even if wholly developed or created off Employer's
premises, on Employee's own time, and without use of Employer's resources or
Confidential Information, if related to Employer's business, shall immediately
be disclosed by Employee to Employer and is and shall be solely Employer's
property. In all such cases, Employee agrees that Employer is the "person for
whom the work was prepared" for the purposes of determining authorship of any
copyright in the Work, and all of the Work shall be deemed "work made for hire"
as that term is defined in Section 101 of the U.S. Copyright Act. In addition,
all inventions, discoveries, improvements, trade secrets, trademarks, service
marks, trade dress, know-how, names, ideas and other proprietary rights and
intellectual property rights, whether or not patentable, embodied in,
represented by, incorporated in, part of, or relating to any of the Work
(collectively, "Other Intellectual Property Rights") are, and shall be, as
between Employer and Employee, the property of solely Employer, and, so there
will be no doubt, Employee hereby assigns to Employer, its successors and
assigns all of Employee's right, title and interest in and to all Other
Intellectual Property Rights. If, for any reason, any of the Work is determined
not to be a "work made for hire" under U.S. law or the law of any other
jurisdiction, Employee agrees to assign, and does hereby assign, to Employer,
its successors and assigns all of Employee's right, title and interest in and to
all copyrights in all of the Work. Employee shall execute and deliver to
Employer from time to time upon Employer's request such confirmatory
assignments, instruments and other documents so as to evidence and confirm full
record and beneficial ownership of
9
Employer in all such Work. Employee hereby irrevocably appoints Employer as
Employee's attorney-in-fact for the purpose of signing and delivering such
assignments, instruments and other documents, such appointment being coupled
with an interest. "Work" does not include works or inventions which do not
relate to Employer's business and are wholly created or developed by Employee
off Employer's premises, on Employee's own time and without use of Employer's
resources or Confidential Information.
11. NON-INTERFERENCE WITH THIRD-PARTY RIGHTS
By signing this Agreement, and accepting employment or continued
employment with Employer, Employee is representing and warranting to Employer
that (a) Employee is free to accept or continue employment with Employer,
meaning that Employee has no contractual or other commitments which restrict
Employee from performing Employee's employment duties to the fullest extent, and
(b) only Employer is entitled to the benefit of Employee's work and efforts.
Employer advises Employee that Employer has no interest in using any other
person's patents, copyrights, trademarks, trade secrets or confidential or
proprietary information ("Intellectual Property Rights") in an unlawful manner,
and Employee agrees that Employee will not, in performing Employee's employment
duties, make use of any Intellectual Property Rights belonging to another which
Employer has no right to use. If Employee has any doubt about whether Employee
is misusing Intellectual Property Rights of another, Employee shall promptly
notify one of one of the Co-CEOs or General Counsel of Omega Research, Inc.
("General Counsel"), so that Employer may investigate and make the appropriate
decision.
12. VIOLATION OF POLICIES BY OTHER EMPLOYEES
Many, if not most, of Employer's employees are required to sign
this Agreement as a condition of employment or continued employment with
Employer. If Employee becomes aware that any other employee of Employer is
violating any provisions of this Agreement, Employee shall promptly report such
violation to one of the Co-CEOs or General Counsel. The information provided,
and its source, will be treated confidentially to the extent possible in the
circumstances. While Employer understands that it is not always easy or pleasant
to report wrongdoings of a co-worker, it is critically important that these
provisions be observed by Employee, as violations of this Agreement may cause
substantial and irreparable harm to Employer's business which would cause all
employees of Employer to suffer.
13. UNFAIR BUSINESS PRACTICES
If, during Employee's employment with Employer, Employee learns or
suspects that any unfair or questionable business practice may be occurring,
Employee shall advise one of the Co- CEOs or General Counsel promptly. This
obligation is intentionally broad and general because it is difficult to
anticipate all possible circumstances, and Employee should resolve all doubts by
reporting the information in question to one of such persons. In particular, if
Employee receives an offer of any kind (kickbacks, job offers, gifts, offers of
money in exchange for information, etc.) from any outside party or another
employee of Employer, Employee shall immediately notify Employer and provide all
information relating to such offer; provided, however, that this provision
10
shall not require Employee to report a bona fide job offer that is not received
in exchange for Company information or in connection with any questionable,
improper or illegal purpose. No gift, favor, offer, benefit, promise to pay or
other thing of value shall be offered, made or authorized by Employee for any
questionable, improper or illegal purpose, nor shall any bribe or kickback be
offered, made or authorized by Employee, directly or indirectly, regardless of
motive, to or for the benefit of any customer, supplier or other person or
entity doing business with Employer, or any employee or agent thereof, or to or
for the benefit of any governmental official or employee.
14. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to the
laws of the State of Texas. In the event of a dispute, venue shall be in the
state or federal courts for Dallas County, Texas.
15. SUCCESSION
This Agreement shall inure to the benefit of the parties and their
respective heirs, administrators, legal representatives, successors and assigns
and shall be binding upon the parties and their respective heirs,
administrators, legal representatives and successors; however, this Agreement
may not be assigned by Employee.
16 NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained in this Agreement shall not be deemed a continuing waiver or
a waiver of any future or past breach or violation. No oral waiver shall be
effective or binding.
17. PRIOR OR SEPARATE AGREEMENTS
This Agreement contains the entire agreement between Employer and
Employee in Employee's capacity as an employee of Employer concerning its
subject matter, and supersedes all prior and contemporaneous agreements, written
or oral, except that (i) any preexisting or prior agreements regarding
confidentiality, non-solicitation, inventions, work product, proprietary rights,
trade secrets and non-competition shall survive to the extent necessary to allow
Employer maximum protection for its trade secrets, confidential information,
goodwill and employee, licencee, independent contractor, consultant,
distributor, retailer, reseller, customer and other business relationships and
(ii) this Agreement and the covenants and agreements set forth herein are
separate and independent of any Shareholder Non-Competition and Non-Disclosure
Agreement that has been executed and delivered by Employee concurrently herewith
and the covenants and agreements set forth therein and, accordingly, no pursuit
or enforcement of any particular right, power, privilege or remedy under this
Agreement or such Shareholder Non-Competition and Non-Disclosure Agreement (as
the case may be) at any particular time or from time to time, singly or together
with others, or any partial exercise thereof, shall operate as a waiver of, or
preclude the exercise or availability of, any right, power, privilege or remedy
of Employer under this Agreement, such Shareholder Non- Competition and
Non-Disclosure Agreement or any other agreement (as the case may be).
11
18. ATTORNEY'S FEES
In the event either party hereto prevails in any dispute arising
from or relating to this Agreement, the non-prevailing party will be liable for
the prevailing party's reasonable and necessary attorneys' and paralegals' fees
and expenses and court costs before and at trial, in any other proceedings and
at all appellate levels.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
Regarding Employment effective as of the day and year first written above.
[SIGNATURES ARE ON FOLLOWING PAGE]
EMPLOYEE:
Signature: _________________________________
Print Name:________________________________
EMPLOYER:
WINDOW ON WALLSTREET INC.
By: _______________________________________
Name:
Title:
12
SCHEDULE A
POSITION AND COMPENSATION
Position: ____________________________
Annual Base Salary: ___________________
13
EXHIBIT "D"
SHAREHOLDER NON-COMPETITION AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT, effective as of October 25, 1999 ("Effective Date") is
by and between Window on WallStreet Inc., a Texas corporation ("Window on
WallStreet"), and Omega Research, Inc., ("Omega"), a Florida corporation, on the
one hand, and _____________________ ("Shareholder"), on the other hand.
A. RECITALS
1. Shareholder is, and will be up to and through the consummation of
the merger (the "Merger ") contemplated under the Agreement and Plan of Merger
of even date herewith (the "Merger Agreement"), the owner of certain outstanding
shares of common stock, no par value, of Window on WallStreet ("WOW Common
Stock"). Pursuant to the Merger, Shareholder will receive common stock, $.01 par
value, of Omega ("Omega Common Stock") and cash for fractional shares in
exchange for WOW Common Stock owned by Shareholder.
2. Upon consummation of the Merger, WOW Acquisition Corporation, a
Texas corporation and wholly owned subsidiary of Omega ("Merger Sub"), will be
merged with and into Window on WallStreet, and the separate corporate existence
of Merger Sub will cease and Window on WallStreet will continue as the surviving
corporation. Window on WallStreet as the surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation."
3. As a further result of the consummation of the Merger, Omega will
own one hundred percent of the common stock of the Surviving Corporation and
Shareholder, together with all the other holders of WOW Common Stock, will
effectively transfer ownership of the business of Window on WallStreet to Omega.
4. Shareholder anticipates that the consummation of the Merger will
cause Shareholder significant financial gain and advantage. Shareholder
acknowledges and understands that the execution and delivery by Shareholder of
this Agreement is a specific condition precedent to the obligation of Omega and
Merger Sub to consummate and effect the Merger, and Shareholder is executing
this Agreement in consideration of consummation by Omega and Merger Sub of, and
as material inducement to Omega and Merger Sub to consummate the Merger,
resulting in Shareholder's receipt of the Omega Common Stock (and cash for
fractional shares).
5. The parties hereto acknowledge and agree that certain covenants are
necessary to protect the value of the goodwill evidenced by the WOW Common Stock
relinquished by Shareholder in exchange for the Omega Common Stock, as well as
the goodwill evidenced by the Omega Common Stock to be received by Shareholder
in the Merger. The parties further agree that,
since Shareholder's execution and delivery of this Agreement is a condition
precedent to consummation of the Merger, this Agreement is therefore beneficial
to all of the parties hereto.
6. This Agreement covers various subjects, including (i) protection of
Omega and Window on WallStreet's goodwill, trade secrets and confidential
information, (ii) non-solicitation of Omega and Window on WallStreet's
customers, licensees, independent contractors, consultants and employees, and
(iii) restrictions on Shareholder's ability to compete with Omega or WallStreet
or participate in competitive businesses for a reasonable period of time after
the Effective Date of this Agreement. Each of these subjects is equally
important, and Shareholder agrees to faithfully and fully observe all covenants
and agreements set forth below relating to each subject addressed, without
exception.
7. Shareholder has been informed and understands, that (a) Omega and
WallStreet have developed and own, and after the Merger will continue to
collaboratively develop and own, at substantial effort and expense, products,
services and valuable trade secrets and other valuable confidential business
information, all of which have enhanced and are expected to continue to enhance
the value of the Omega Common Stock and WOW Common Stock; (b) Omega and
WallStreet have developed and/or will be developing important and substantial
relationships with customers, licensees, independent contractors, consultants,
strategic partners, vendors and/or other third parties having dealings or
contractual relationships with Omega and Window on WallStreet, many of which
have been known to or will be made known to Shareholder in connection with
Shareholder's business relationships with Omega and Window on WallStreet. In
light of all of the foregoing, in order to protect Omega and Window on
WallStreet's legitimate business interests, including their goodwill and trade
secrets, and in consideration for, and in order to induce, consummation of the
Merger, Shareholder has agreed to make, for the separate benefit of and
enforcement by each of Omega and Window on WallStreet, the reasonable covenants
and agreements set forth below.
NOW, THEREFORE, it is agreed as follows:
B. COVENANTS AND AGREEMENTS
1. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
(a) CONFIDENTIAL INFORMATION. Shareholder
acknowledges that Shareholder has been informed by Omega and Window on
WallStreet that it is Omega and Window on WallStreet's policy to maintain as
secret and confidential all information and materials (whether or not stamped or
marked "Confidential" or bearing some other indicia of confidentiality) relating
to (i) the financial conditions, operations and business interests, objectives,
plans and strategies of Omega and Window on WallStreet, (ii) the systems,
know-how, records, products, product plans, product designs, marketing plans,
specifications, drawings, product development, services, cost information,
inventions, computer programs, technology, marketing and sales strategies,
techniques and/or programs, formulae, methods, methodologies, manuals,
proprietary software, customer lists
2
and other trade secrets from time to time acquired, sold, developed, maintained
and/or used by Omega and Window on WallStreet, (iii) the nature and terms of
Omega and Window on WallStreet's relationships with their respective customers,
licensees, subscribers, suppliers, lenders, underwriters, vendors, consultants,
independent contractors, strategic partners, other third parties having dealings
or contractual relationships with Omega and Window on WallStreet, attorneys,
accountants and employees, and (iv) any proposed public or private offering of
Omega and Window on WallStreet (all such information and materials are
collectively referred to as "Confidential Information").
(b) PROHIBITED DISCLOSURE. Shareholder agrees that Shareholder
will not directly or indirectly at any time (including after the date on which
Shareholder's employment, if any, with Window on WallStreet terminates and
including after Shareholder's ownership of any Omega Common Stock or WOW Common
Stock terminates) divulge, or disclose for any purpose (except as specifically
authorized by both Omega and Window on WallStreet) to any persons, firms,
corporations or other entities (collectively, "Third Parties"), or use or cause
or authorize any Third Parties to use, any such Confidential Information, except
in the capacity of an employee of Window on WallStreet pursuant to any duties in
the course and scope of his employment. "Confidential Information" does not
include information that, at the time of disclosure, is part of the public
domain or is generally known in Omega's and/or Window on WallStreet's industry
without the fault or carelessness of Shareholder. If Shareholder is required by
order of a court or other governmental or self-regulatory authority to disclose
any Confidential Information, Shareholder will immediately notify Omega and
Window on WallStreet so that Omega and Window on WallStreet may attempt to
obtain an appropriate protective order, and, in all events, Shareholder will
only disclose the portion of the Confidential Information required by such order
to be disclosed.
2. COVENANT-NOT-TO-COMPETE
(a) COVENANT-NOT-TO-COMPETE. Shareholder covenants and agrees
that for a period of four (4) years after the Effective Date (the "Effective
Period"), Shareholder will not, directly or indirectly (as defined below), in
any capacity (i) market, sell, provide or license, or be involved in the
marketing, sale, provision or licensing of, any Financial Market Data Software
Products or Software-Related Services (as defined below) to any person or entity
who is or was a distributor, retailer, reseller, licensee, subscriber, or
customer of Omega or Window on WallStreet at any time during the two (2) years
preceding the Effective Date through the conclusion of the Effective Period, or
(ii) market, sell, provide or license, or be involved in the marketing, sale,
provision or licensing of, any Financial Market Data Software Products or
Software-Related Services (as defined below), in whole or in part via electronic
commerce, telemarketing, telecommunication, cable, the Web or the Internet,
anywhere within the world. "Financial Market Data Software Products or
Software-Related Services" means (A) software products and/or services which (1)
collect or deliver financial market data (including but not limited to stocks,
bonds, options, futures, commodities, other securities and/or fundamental
company data), and/or (2) supply financial data to support online investing and
trading, including in the form of financial Web sites and communities, and
Internet-delivered streaming market data services, and/or (3) are or can be used
to make, review or devise investment analyses or strategies, including, without
limitation, charting, technical analysis and/or trading or investment strategy
design, testing and/or automation and/or (B)
3
securities brokerage services (including, without limitation, in connection with
revenue sharing arrangements) and services and products ancillary to any such
securities brokerage services.1 Shareholder acknowledges that the businesses of
Omega and Window on WallStreet are international in scope, that, due to the
electronic and telephonic nature of Omega and Window on WallStreet's businesses
and the nature of their licensees, subscribers and customers, one could
effectively compete with such businesses from nearly anywhere in the world, and
that, therefore, such geographical area of restriction is reasonable in the
circumstances to protect Omega and Window on WallStreet's respective goodwill,
trade secrets and other legitimate business interests.
(b) DEFINITION OF "DIRECTLY OR INDIRECTLY." For purposes of
Section 2(a), "directly or indirectly" means to engage or participate in any
venture, enterprise, activity or business which is materially involved (as
hereinafter defined) in the marketing, selling, licensing or provision of
Financial Market Data Software Products or Software-Related Services, passively
(except for passive investments in publicly-traded companies) or actively, as a
sole proprietor, owner, director, officer, shareholder, partner, member,
consultant, independent contractor, advisor, participant, employee or agent, or
in any other manner. For purposes hereof, "materially involved" means that the
venture, enterprise, activity or business directly or indirectly or together
with any of its subsidiaries, affiliates or partners or through strategic
alliances or any specific division or business unit of any such venture,
enterprise, activity or business either (i) derives in any year 5%1 or more of
its gross revenue from Financial Market Data Software Products or
Software-Related Services or (ii) incurs in any year 5%2 or more of its expenses
(operating and/or capital) in connection with or as a result of Financial Market
Data Software Products or Software-Related Services.
3. NON-SOLICITATION OF EMPLOYEES AND OTHERS.
(a) NON-SOLICITATION OF EMPLOYEES AND OTHERS. Shareholder
acknowledges that Omega and Window on WallStreet each devotes substantial time,
effort and expense to the recruitment, selection, training, development and
promotion of talented individuals for positions of significant responsibility
with Omega and Window on WallStreet. Shareholder further acknowledges that it
would be unfair to use Shareholder's familiarity with Omega's and Window on
WallStreet's businesses, employees, independent contractors and consultants, to
participate, directly or indirectly, in any activities designed to cause any of
Omega's and Window on WallStreet's employees, independent contractors or
consultants to cease performing services for either or both of Omega and Window
on WallStreet. Accordingly, Shareholder covenants and agrees that for the later
to occur of (i) one year following the date of termination of the direct and/or
indirect beneficial ownership by Shareholder of all Omega Common Stock or (ii)
two (2) years after the Effective Date of this Agreement, Shareholder will not,
directly or indirectly, solicit the services of or recruit, whether on
Shareholder's own behalf or on behalf of others, any of the following types of
employees, independent contractors or consultants of Omega and Window on
WallStreet: (i)
-------------------------
1 Subsection (B) is not applicable to the Agreement of Xxxxx Xxxxxx.
2 10% with respect to the Agreement of Ashgar Afghani.
4
executives, managers, supervisors or department directors; (ii) technicians,
engineers, programmers or information services workers (whether employees,
independent contractors or consultants); (iii) product, project or task managers
or supervisors (whether employees, independent contractors or consultants); (iv)
sales, marketing or public relations personnel or consultants; (v) financial or
accounting services personnel or consultants; (vi) legal personnel; (vii)
customer support personnel or consultants; or (viii) human resources personnel;
provided, however, that such provision does not apply to Shareholder's
attorneys, accountants, investment bankers and other professional advisors.
Shareholder agrees not to persuade or cause, or attempt to persuade or cause,
any such employee, independent contractor or consultant to leave Omega's or
Window on WallStreet's employ or cease performing services for Omega or Window
on WallStreet.
(b) DAMAGES. Shareholder acknowledges that breach or violation
of this covenant would cause substantial damages to Omega and/or Window on
WallStreet. Shareholder agrees that, in the event of a breach or violation of
this covenant of non-solicitation, Shareholder will be liable to compensate
Omega and/or Window on WallStreet for all damages, including, without
limitation, consequential damages, not limited to lost profits, expenses
incurred to replace the employee or business relationship, finder's fees,
sign-on bonuses and compensation, remuneration and/or benefits premiums paid to
employees, independent contractors and consultants to secure their services to
replace the lost relationship(s). The payment of such damages shall not limit,
impair or diminish Omega's and/or Window on WallStreet's right to seek and
obtain (x) any appropriate equitable relief (including but not limited to
specific performance, temporary restraining order and temporary and permanent
injunction), (y) other monetary and other relief, at law or in equity, for other
causes of action which may have resulted from Shareholder's breach or violation
(such as intentional interference with contractual or business relations in the
event an employee is solicited by Shareholder for a competitive position and
such employee is subject to a covenant-not-to-compete), or (z) monetary and
other relief, at law or in equity, from or against persons or entities other
than Shareholder.
4. REMEDIES FOR BREACH OF SECTIONS 1, 2 AND 3
In addition to the remedies referred to in Section 3(b), above
Shareholder agrees that, if Shareholder breaches or violates any of
Shareholder's covenants or agreements in Section 1, 2 and 3 hereof, Omega and
Window on WallStreet shall be entitled to an accounting and repayment of any and
all profits, compensation, commissions, payments and benefits which Shareholder
directly or indirectly has realized and realizes as a result of, or in
connection with, any such violation or breach. In addition, in the event of a
breach or violation or threatened or imminent breach or violation of any
provisions of Section 1, 2 and 3 hereof, Omega and Window on WallStreet shall be
entitled to a temporary and permanent injunction or any other appropriate decree
of specific performance or equitable relief (without, unless otherwise required
by statute, being required to post bond or other security) from a court of
competent jurisdiction in order to prevent, prohibit or restrain any such breach
or violation or threatened breach or violation by Shareholder. Omega and Window
on WallStreet shall be entitled to such injunctive or other equitable relief in
addition to any ascertainable damages which are suffered. It is understood that
resort by Omega and Window on WallStreet (or either of them) to such injunctive
or other equitable relief shall not be deemed to
5
waive or to limit in any respect any other rights or remedies which Omega and
Window on WallStreet (or either of them) may have with respect to such breach or
violation.
5. REASONABLENESS OF RESTRICTIONS
(a) REASONABLENESS. Shareholder acknowledges that any breach
or violation of Section 1, 2 or 3 hereof will likely cause irreparable injury
and damage to each of Omega and Window on WallStreet and that it would be very
difficult or impossible to measure all of the damages resulting from any such
breach or violation. Shareholder further acknowledges that Shareholder has
carefully read and considered the provisions of Sections 1, 2 and 3 hereof and,
having done so, agrees that the restrictions and remedies set forth in such
Sections (including the time period, geographical limits and scope of activity
restricted) are fair and reasonable and do not impose a greater restraint than
is necessary for the protection of the trade secrets, goodwill and other
legitimate business interests of each of Omega and Window on WallStreet.
(b) SEVERABILITY. Shareholder understands and intends that
each provision and restriction agreed to by Shareholder in Sections 1, 2 and 3
hereof be construed as separate and divisible from every other provision and
restriction. In the event that any one of the provisions of, or restrictions in,
Sections 1, 2 and/or 3 hereof shall be held to be invalid or unenforceable, and
is not reformed by a court of competent jurisdiction (which a court, in lieu of
striking a provision entirely, is urged by the parties to do), the remaining
provisions and restrictions shall continue to be valid and enforceable as though
the invalid or unenforceable provision or restriction had not been included. In
the event that any provision relating to time period, geographical limits or
scope of activity restricted (collectively, "Limitations") shall be declared by
a court of competent jurisdiction to exceed the maximum or permissible
Limitations such court deems reasonable and enforceable, said Limitations shall
be deemed to become and shall then be the maximum Limitations which such court
deems reasonable and enforceable.
6. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to
the laws of the State of Texas. In the event of a dispute, venue shall lie in
the state or federal courts for Dallas County, Texas.
7. SUCCESSION
This Agreement shall inure to the benefit of the parties and
their respective heirs, administrators, legal representatives, successors and
assigns and shall be binding upon the parties and their respective heirs,
administrators, legal representatives and successors.
8. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained in this Agreement shall not be deemed a continuing waiver or
a waiver of any future or past breach or violation. No oral waiver shall be
effective or binding.
6
9. SEPARATE AGREEMENT; CUMULATIVE REMEDIES
This Agreement and the covenants and agreements set forth
herein are separate and independent of any Agreement Regarding Employment that
has been executed and delivered by Shareholder in connection with the Merger and
the covenants and agreements set forth therein. Accordingly, no pursuit or
enforcement of any particular right, power, privilege or remedy under this
Agreement or under such Agreement Regarding Employment (as the case may be) at
any particular time or from time to time, singly or together with others, or any
partial exercise thereof, shall operate as a waiver of, or preclude the exercise
or availability of, any right, power, privilege or remedy of Omega or Window on
WallStreet under this Agreement, such Agreement Regarding Employment or any
other agreement (as the case may be).
10. ATTORNEY'S FEES
In the event any party hereto prevails in any dispute arising
from or relating to this Agreement, the nonprevailing party will be liable for
the prevailing party's reasonable and necessary attorneys' and paralegals' fees
and expenses and court costs before and at trial, in any other proceedings and
at all appellate levels.
IN WITNESS WHEREOF, the undersigned have executed this Shareholder
Non-Competition and Non-Disclosure Agreement effective as of the day and year
first above written.
SHAREHOLDER:
Signature:__________________________________
Print Name:_________________________________
OMEGA RESEARCH, INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
WINDOW ON WALLSTREET INC.
By:_________________________________________
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
7
EXHIBIT "E"
FORM OF STOCK OPTION AGREEMENT
Agreement, effective as of the 25th day of October, 1999 (the "Date of
Grant") between Omega Research, Inc., a Florida corporation (the "Company"), and
_______________ ("Optionee").
1. GRANT OF OPTIONS
The Company grants to Optionee, on the terms and conditions
set forth below and subject to the terms and conditions of the Omega Research,
Inc. Amended and Restated 1996 Incentive Stock Plan, as amended (the "Plan"),
options (the "Options") to purchase up to _______ shares (individually a "Share"
and collectively the "Shares") of Omega Research, Inc. common stock (the "Common
Stock"), par value $.01 per share, for a price of $____ per Share (the "Option
Price"), subject to adjustment as provided in Paragraph 3 below. Each of the
Options is granted as an incentive stock option under Section 422 of the
Internal Revenue Code, as amended (the "Code") to the extent permitted pursuant
to the Code and the Plan. Optionee acknowledges receipt of a copy of the Plan
and agrees to be bound by the terms and provisions thereof, as same may be
amended from time to time, regardless of whether such terms and provisions have
been set forth in this Agreement. In the event of any conflict between this
Agreement and the Plan, the Plan shall govern.
2. TERMS AND CONDITIONS OF OPTIONS
(a) TERM OF OPTIONS
Subject to the limitations set forth in this
Agreement (including, without limitation, subparagraph (c) below), the Options,
to the extent vested pursuant to subparagraph (g) below, may be exercised by
Optionee in whole or in part from time to time during the period beginning on
the Date of Grant and ending on the day preceding the tenth anniversary of the
Date of Grant. In no event shall any of the Options granted under this Agreement
be exercisable upon or after the expiration of 10 years from the Date of Grant.
(b) NON-TRANSFERABILITY OF OPTIONS
The Options shall not be transferable by Optionee
other than by will or by the laws of descent and distribution and may be
exercised during Optionee's lifetime only by Optionee. If any Options are
exercised after Optionee's death, the Company may require evidence reasonably
satisfactory to it of the appointment and qualification of Optionee's personal
representatives and their authority and of the right of any heir or distributee
to exercise such Options.
(c) TERMINATION OF EMPLOYMENT
If Optionee's employment with the Company terminates
for any reason, Optionee shall have the right to exercise the then unexercised
portion of the Options which have vested as of the date of termination of
employment within the applicable time period following termination, if any, as
described below. Upon the expiration of the applicable time period, if any, all
of the Options then unexercised,
whether or not vested, shall automatically and
without notice terminate and become null and void. Such time periods (if any),
and the circumstances of termination under which they respectively apply, are as
follows:
(i) In the event that Optionee resigns or Optionee's
employment is terminated by the Company (other than a termination described in
subparagraph (ii), (iii) or (iv) below), the Options then vested in accordance
with subparagraph (g) may be exercised, subject to subparagraph (v) below,
during the period commencing on the date of resignation or termination of
employment and ending on the 90th consecutive day thereafter; provided that, if
Optionee shall die during such 90-day period, Optionee's right to exercise the
unexercised portion of the Options vested at the date of resignation or
termination of employment shall be determined under the provisions of
subparagraph (iii) below.
(ii) In the event that Optionee's employment is
terminated by the Company due solely to Optionee's permanent disability, the
Options then vested in accordance with subparagraph (g) may be exercised,
subject to subparagraph (v) below, during the period commencing on the date of
termination of employment and ending on the first anniversary thereof.
(iii) In the event of Optionee's death either during
Optionee's employment by the Company or during the 90-day period following the
date of Optionee's resignation or termination of such employment by the Company
pursuant to subparagraph (c)(i), the Options then vested in accordance with
subparagraph (g) may be exercised, subject to subparagraph (v) below, during the
period commencing on the date of Optionee's death and ending on the first
anniversary thereof.
(iv) In the event of termination of Optionee's
employment for cause (as defined below), all Options, vested and unvested, shall
expire at the date and time of termination of Optionee's employment by the
Company for cause. For purposes hereof, "cause" means the following acts or
conduct on the part of Optionee: fraud upon the Company; dishonesty or gross
neglect the effect of which is, or is likely to be, materially adverse to the
Company, its business or reputation; commission of a felony; abandonment of
duties; wilful acts or omissions resulting in material governmental sanctions
against Optionee or the Company (unless such acts or omissions were authorized
by, or taken or made with the knowledge of, the Company's Co-CEO's (or either of
them), President or Board of Directors); a wilful breach by Optionee of any of
Optionee's nondisclosure, noncompetition or other covenants or obligations set
forth in the Company's Agreement Regarding Employment entered into by Optionee
and/or that certain Employment Agreement by and between Optionee and Window on
WallStreet Inc. ("Window"); or a breach by Optionee (other than a wilful breach)
of any of Optionee's nondisclosure, noncompetition or other covenants or
obligations set forth in the aforesaid Agreement Regarding Employment with
Company and/or Employment Agreement with Window which is not cured within 30
days after Optionee receives notice thereof.
(v) Notwithstanding any of the foregoing to the
contrary, in the event that following a termination of Optionee's employment for
a reason other than cause the Company discovers (and the Committee (as defined
in the Plan) determines) that acts or conduct on the part of Optionee have
occurred constituting cause, the provisions of subparagraph (iv) above shall
then automatically apply and Optionee shall have no right to exercise any then
unexercised Options, even if vested. For purposes of this paragraph, Options
shall not be deemed exercised until the transaction involving such exercise of
Options has been fully executed. The Company shall notify Optionee promptly in
the event that it discovers a cause event after termination of employment and
the Committee (as defined in the Plan) has determined that subparagraph (iv)
above shall apply, but giving such notice is not a condition to the Company's
right to exercise its rights under this paragraph.
2
Neither this Agreement nor any Option granted hereunder shall confer on
Optionee any right to continue in the Company's employ, or limit in any respect
the Company's right (in the absence of a specific written agreement to the
contrary) to terminate Optionee's employment at any time with or without cause.
In all events, upon any termination of Optionee's employment with the
Company or upon Optionee's death, whichever is first to occur, the unvested
portion, if any, of any then unexercised Options shall automatically and without
notice terminate and become null and void.
(d) EXERCISE OF OPTIONS
The Options may be exercised only by written notice
to the Chief Financial Officer of the Company at its principal business office
or such other office as the Company may from time to time direct, which shall
specify the number of optioned Shares being purchased. Any notice of exercise of
Options shall be accompanied by payment of the full purchase price for the
Shares being purchased: (i) by check payable to the Company; or (ii) with the
prior consent of the Company, by tendering previously acquired shares of Common
Stock having a fair market value (as defined in the Plan and determined as of
the date such Options are exercised) equal to all of the purchase price; or
(iii) with the prior consent of the Company, by any combination of (i) and (ii),
provided that any payment involving the delivery of Common Stock does not result
in a charge to earnings for financial accounting purposes, as determined by the
Committee (as defined in the Plan). Subject to the foregoing proviso, and with
the prior consent of the Company, if shares of the Common Stock are readily
tradeable on a national securities exchange or other market system at the time
of exercise, payment may also be made by delivering a properly executed exercise
notice to the Company together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds to
pay the exercise price. The Company shall have no obligation to deliver the
Shares being purchased pursuant to the exercise of any Options, in whole or in
part, until the aforesaid payment in full of the purchase price therefor is
received by the Company.
(e) ISSUANCE OF SHARES
If, at any time, the Company, in its reasonable
judgment, or on advice of counsel, shall determine that the listing,
registration or qualification of the Shares covered by the Options on any
securities exchange or under any state or federal law is necessary as a
condition of, or in connection with, the purchase or delivery of Shares
hereunder, and that no exemptions are applicable, the delivery of any or all
Shares pursuant to exercise of the Options may be withheld unless and until such
listing, registration or qualification shall have been effected. Optionee agrees
to comply with any and all legal requirements relating to Optionee's resale or
other disposition of any Shares acquired under this Agreement. The Company may
require, as a condition of exercise of any Options, that Optionee represent, in
writing, that the Shares received upon exercise of the Options are being
acquired for investment and not with a view to distribution, and that Optionee
agree that the Shares will not be disposed of except pursuant to an effective
registration statement unless the Company shall have received an opinion of
counsel reasonably satisfactory to the Company that such disposition is exempt
from registration under the Securities Act of 1933, as amended. The Company may
endorse on certificates representing Shares issued upon the exercise of Options
such legends referring to the foregoing representations or any applicable
restrictions on resale as the Company, in its discretion, shall deem
appropriate.
3
(f) RIGHTS AS A SHAREHOLDER
Optionee shall acquire none of the rights of a
shareholder of the Company under this Agreement unless and until certificates
for Shares are issued to Optionee upon the exercise of Options.
(g) VESTING
The right to exercise the Options shall vest 20% on
each anniversary of the Date of Grant so that, subject to the provisions for
earlier termination herein set forth, the right to exercise the Options shall be
100% vested on the fifth anniversary of the Date of Grant. Upon termination of
Optionee's employment for any reason, the Company may, in its sole and absolute
discretion, accelerate, in whole or in part, the vesting of any Options which
are unvested at the date of termination of employment.
(h) SALE OF THE COMPANY
In the event of a Sale of the Company, the Company
may require Optionee to exercise all of the Options then vested effective
immediately prior to the consummation of the Sale of the Company. In such event,
the Company and Optionee shall cooperate to effectuate the exercise of the
then-vested Options immediately prior to the consummation of the Sale of the
Company so that the Shares issuable upon such exercise are recognized as issued
and outstanding prior to such consummation. All Options which have not vested at
the date of the Sale of the Company shall automatically and without notice at
that time expire. "Sale of the Company" means any transaction pursuant to which
all or substantially all of the business or operations of the Company are
directly or indirectly sold, assigned or transferred to an arms-length purchaser
through the sale, exchange or other transfer, by purchase, merger or otherwise,
of the assets or equity of the Company.
3. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
In the event of any stock split, stock dividend,
reclassification or restructuring which changes the character or amount of the
Company's outstanding Common Stock while any portion of any Options granted
pursuant to this Agreement are outstanding but unexercised, the Company shall
make such adjustments in the character and number of Shares subject to such
Options and in the Option Price (per Share) as shall be equitable and
appropriate in order to make such Options, as nearly as may be practicable,
equivalent to such Options immediately prior to such change; PROVIDED, HOWEVER,
that no such adjustment shall give Optionee any additional benefits under this
Agreement; and PROVIDED FURTHER, if any such adjustment is made by reason of a
transaction described in section 424(a) of the Code, it shall be made so as to
conform to the requirements of that section and the regulations thereunder.
If any transaction (other than a change specified in the
preceding paragraph) described in section 424(a) of the Code affects the
Company's Common Stock subject to any unexercised Option granted hereunder
(hereinafter for purposes of this Paragraph 3 referred to as the "old option"),
the Board of Directors of the Company or any surviving or acquiring corporation
may take such action as it deems appropriate, and in conformity with the
requirements of that section and the regulations thereunder, to substitute a new
option for the old option, in order to make the new option, as nearly as may be
practicable, equivalent to the old option, or to assume the old option.
If any such change or transaction shall occur, the number and
kind of Shares to be issued upon the exercise of any Options shall be adjusted
to give effect thereto.
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4. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Shares
subject to Options may be commingled with any other corporate funds and used for
any corporate purpose.
5. GENERAL
(a) Any communication in connection with this Agreement shall
be deemed duly given when delivered in person (including by courier service) or
mailed by certified or registered mail, return receipt requested, to Optionee at
Optionee's address listed on the signature page hereof or such other address of
which Optionee shall have advised the Company by similar notice; and to the
Company at the Company's then executive offices.
(b) This Agreement sets forth the parties' final and entire
agreement with respect to its subject matter, may not be changed or terminated
orally and shall be governed by and construed in accordance with the internal
laws of the State of Florida. This Agreement shall bind and inure to the benefit
of Optionee, and Optionee's heirs, distributees and personal and legal
representatives, and the Company and its successors and assigns.
(c) Wherever from the context it appears appropriate, each
term stated in either the singular or the plural shall include the singular and
the plural, and pronouns stated in the masculine, the feminine or the neuter
gender shall include the masculine, feminine and neuter.
IN WITNESS WHEREOF, the parties have duly executed this Stock Option
Agreement as of the date first above written.
OPTIONEE: OMEGA RESEARCH, INC., a Florida
corporation
______________________________ By:____________________________________
Xxxxxxx Xxxxxx, President
______________________________
Address
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EXHIBIT "E-1"
FORM OF STOCK OPTION AGREEMENT
Agreement, effective as of the 25th day of October, 1999 (the "Date of
Grant") between Omega Research, Inc., a Florida corporation (the "Company"), and
_______________ ("Optionee").
1. GRANT OF OPTIONS
The Company grants to Optionee, on the terms and conditions
set forth below and subject to the terms and conditions of the Omega Research,
Inc. Amended and Restated 1996 Incentive Stock Plan, as amended (the "Plan"),
options (the "Options") to purchase up to 75,000 shares (individually a "Share"
and collectively the "Shares") of Omega Research, Inc. common stock (the "Common
Stock"), par value $.01 per share, for a price of $____ per Share (the "Option
Price"), subject to adjustment as provided in Paragraph 3 below. Each of the
Options is granted as an incentive stock option under Section 422 of the
Internal Revenue Code, as amended (the "Code") to the extent permitted pursuant
to the Code and the Plan. Optionee acknowledges receipt of a copy of the Plan
and agrees to be bound by the terms and provisions thereof, as same may be
amended from time to time, regardless of whether such terms and provisions have
been set forth in this Agreement. In the event of any conflict between this
Agreement and the Plan, the Plan shall govern.
2. TERMS AND CONDITIONS OF OPTIONS
(a) TERM OF OPTIONS
Subject to the limitations set forth in this
Agreement (including, without limitation, subparagraph (c) below), the Options,
to the extent vested pursuant to subparagraph (g) below, may be exercised by
Optionee in whole or in part from time to time during the period beginning on
the Date of Grant and ending on the day preceding the tenth anniversary of the
Date of Grant. In no event shall any of the Options granted under this Agreement
be exercisable upon or after the expiration of 10 years from the Date of Grant.
(b) NON-TRANSFERABILITY OF OPTIONS
The Options shall not be transferable by Optionee
other than by will or by the laws of descent and distribution and may be
exercised during Optionee's lifetime only by Optionee. If any Options are
exercised after Optionee's death, the Company may require evidence reasonably
satisfactory to it of the appointment and qualification of Optionee's personal
representatives and their authority and of the right of any heir or distributee
to exercise such Options.
(c) TERMINATION OF EMPLOYMENT
If Optionee's employment with the Company terminates
for any reason, Optionee shall have the right to exercise the then unexercised
portion of the Options which have vested as of the date of termination of
employment within the applicable time period following termination, if any, as
described below. Upon the expiration of the applicable time period, if any, all
of the Options then unexercised,
whether or not vested, shall automatically and without notice terminate and
become null and void. Such time periods (if any), and the circumstances of
termination under which they respectively apply, are as follows:
(i) In the event that Optionee resigns or
Optionee's employment is terminated by the Company (other than a termination
described in subparagraph (ii), (iii) or (iv) below), the Options then vested in
accordance with subparagraph (g) may be exercised, subject to subparagraph (v)
below, during the period commencing on the date of resignation or termination of
employment and ending on the 90th consecutive day thereafter; provided that, if
Optionee shall die during such 90-day period, Optionee's right to exercise the
unexercised portion of the Options vested at the date of resignation or
termination of employment shall be determined under the provisions of
subparagraph (iii) below.
(ii) In the event that Optionee's employment is
terminated by the Company due solely to Optionee's permanent disability, the
Options then vested in accordance with subparagraph (g) may be exercised,
subject to subparagraph (v) below, during the period commencing on the date of
termination of employment and ending on the first anniversary thereof.
(iii) In the event of Optionee's death either during
Optionee's employment by the Company or during the 90-day period following the
date of Optionee's resignation or termination of such employment by the Company
pursuant to subparagraph (c)(i), the Options then vested in accordance with
subparagraph (g) may be exercised, subject to subparagraph (v) below, during the
period commencing on the date of Optionee's death and ending on the first
anniversary thereof.
(iv) In the event of termination of Optionee's
employment for cause (as defined below), all Options, vested and unvested, shall
expire at the date and time of termination of Optionee's employment by the
Company for cause. For purposes hereof, "cause" means the following acts or
conduct on the part of Optionee: fraud upon the Company; dishonesty or gross
neglect the effect of which is, or is likely to be, materially adverse to the
Company, its business or reputation; commission of a felony; abandonment of
duties; wilful acts or omissions resulting in material governmental sanctions
against Optionee or the Company (unless such acts or omissions were authorized
by, or taken or made with the knowledge of, the Company's Co-CEO's (or either of
them), President or Board of Directors); a wilful breach by Optionee of any of
Optionee's nondisclosure, noncompetition or other covenants or obligations set
forth in the Company's Agreement Regarding Employment entered into by Optionee;
or a breach by Optionee (other than a wilful breach) of any of Optionee's
nondisclosure, noncompetition or other covenants or obligations set forth in the
aforesaid Agreement Regarding Employment which is not cured within 30 days after
Optionee receives notice thereof.
(v) Notwithstanding any of the foregoing to the
contrary, in the event that following a termination of Optionee's employment for
a reason other than cause the Company discovers (and the Committee (as defined
in the Plan) determines) that acts or conduct on the part of Optionee have
occurred constituting cause, the provisions of subparagraph (iv) above shall
then automatically apply and Optionee shall have no right to exercise any then
unexercised Options, even if vested. For purposes of this paragraph, Options
shall not be deemed exercised until the transaction involving such exercise of
Options has been fully executed. The Company shall notify Optionee promptly in
the event that it discovers a cause event after termination of employment and
the Committee (as defined in the Plan) has determined that subparagraph (iv)
above shall apply, but giving such notice is not a condition to the Company's
right to exercise its rights under this paragraph.
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Neither this Agreement nor any Option granted hereunder shall confer on
Optionee any right to continue in the Company's employ, or limit in any respect
the Company's right (in the absence of a specific written agreement to the
contrary) to terminate Optionee's employment at any time with or without cause.
In all events, upon any termination of Optionee's employment with the
Company or upon Optionee's death, whichever is first to occur (but subject to
the penultimate sentence of subparagraph (g)) , the unvested portion, if any, of
any then unexercised Options shall automatically and without notice terminate
and become null and void.
(d) EXERCISE OF OPTIONS
The Options may be exercised only by written notice
to the Chief Financial Officer of the Company at its principal business office
or such other office as the Company may from time to time direct, which shall
specify the number of optioned Shares being purchased. Any notice of exercise of
Options shall be accompanied by payment of the full purchase price for the
Shares being purchased: (i) by check payable to the Company; or (ii) with the
prior consent of the Company, by tendering previously acquired shares of Common
Stock having a fair market value (as defined in the Plan and determined as of
the date such Options are exercised) equal to all of the purchase price; or
(iii) with the prior consent of the Company, by any combination of (i) and (ii),
provided that any payment involving the delivery of Common Stock does not result
in a charge to earnings for financial accounting purposes, as determined by the
Committee (as defined in the Plan). Subject to the foregoing proviso, and with
the prior consent of the Company, if shares of the Common Stock are readily
tradeable on a national securities exchange or other market system at the time
of exercise, payment may also be made by delivering a properly executed exercise
notice to the Company together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds to
pay the exercise price. The Company shall have no obligation to deliver the
Shares being purchased pursuant to the exercise of any Options, in whole or in
part, until the aforesaid payment in full of the purchase price therefor is
received by the Company.
(e) ISSUANCE OF SHARES
If, at any time, the Company, in its reasonable
judgment, or on advice of counsel, shall determine that the listing,
registration or qualification of the Shares covered by the Options on any
securities exchange or under any state or federal law is necessary as a
condition of, or in connection with, the purchase or delivery of Shares
hereunder, and that no exemptions are applicable, the delivery of any or all
Shares pursuant to exercise of the Options may be withheld unless and until such
listing, registration or qualification shall have been effected. Optionee agrees
to comply with any and all legal requirements relating to Optionee's resale or
other disposition of any Shares acquired under this Agreement. The Company may
require, as a condition of exercise of any Options, that Optionee represent, in
writing, that the Shares received upon exercise of the Options are being
acquired for investment and not with a view to distribution, and that Optionee
agree that the Shares will not be disposed of except pursuant to an effective
registration statement unless the Company shall have received an opinion of
counsel reasonably satisfactory to the Company that such disposition is exempt
from registration under the Securities Act of 1933, as amended. The Company may
endorse on certificates representing Shares issued upon the exercise of Options
such legends referring to the foregoing representations or any applicable
restrictions on resale as the Company, in its discretion, shall deem
appropriate.
3
(f) RIGHTS AS A SHAREHOLDER
Optionee shall acquire none of the rights of a
shareholder of the Company under this Agreement unless and until certificates
for Shares are issued to Optionee upon the exercise of Options.
(g) VESTING
The right to exercise the Options shall vest 20% on
each anniversary of the Date of Grant so that, subject to the provisions for
earlier termination herein set forth, the right to exercise the Options shall be
100% vested on the fifth anniversary of the Date of Grant. Notwithstanding such
vesting schedule, upon a Qualified Sale of the Company or Change In Control (as
such term is hereinafter defined), or upon the termination of Optionee's
employment due to death or permanent disability, the right to exercise the
Options shall automatically become 100% vested. In addition, upon termination of
Optionee's employment for any reason, the Company may, in its sole and absolute
discretion, accelerate, in whole or in part, the vesting of any Options which
are unvested at the date of termination of employment.
(h) SALE OF THE COMPANY
In the event of a Sale of the Company, the Company
may require Optionee to exercise all of the Options effective immediately prior
to the consummation of the Sale of the Company. In such event, the Company and
Optionee shall cooperate to effectuate the exercise of the Options immediately
prior to the consummation of the Sale of the Company so that the Shares issuable
upon such exercise are recognized as issued and outstanding prior to such
consummation.
(i) CERTAIN DEFINITIONS
For purposes hereof, the following capitalized terms
have the respective meanings ascribed to them below:
(i) "Qualified Sale of the Company or Change in
Control" means either a Sale of the Company or Change in Control in connection
with which the Plan is not being assumed by the acquiror or successor company in
the subject transaction or, in the judgment solely of the Board of Directors of
the Company, Optionee's position is being eliminated.
(ii) "Sale of the Company" means any transaction
pursuant to which all or substantially all of the business or operations of the
Company are directly or indirectly sold, assigned or transferred to an
arms-length purchaser through the sale, exchange or other transfer, by purchase,
merger or otherwise, of the assets or equity of the Company.
(iii) A "Change in Control" shall be deemed to have
occurred on the date that (a) Xxxxxxx Xxxx (counting for these purposes all
Common Stock owned by any of his Affiliates) and Xxxxx Xxxx (counting for these
purposes all Common Stock owned by any of his Affiliates) in the aggregate own
less than 25% (or less than 51% if the Company is not public) of the issued and
outstanding Common Stock, (b) Xxxxxxx Xxxx (counting for these purposes all
Common Stock owned by any of his Affiliates) and Xxxxx Xxxx (counting for these
purposes all Common Stock owned by any of his Affiliates), viewing all of the
foregoing as one stockholder, is not the stockholder of the Company owning the
highest number of issued and outstanding shares of
4
Common Stock, or (c) neither Xxxxxxx Xxxx nor Xxxxx Xxxx occupies the position
of Chairman of the Board, Co-Chairman of the Board, Chief Executive Officer,
Co-Chief Executive Officer or President of the Company.
(iv) "Affiliate" means, with respect to Xxxxxxx Xxxx
or Xxxxx Xxxx, an immediate family member, a trust principally for his benefit
and/or for the benefit of his family members and/or lineal descendants and/or
charitable purposes, or a family limited partnership or other entity the
beneficial owners of which are, principally, him and/or his family members
and/or such trusts.
3. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
In the event of any stock split, stock dividend,
reclassification or restructuring which changes the character or amount of the
Company's outstanding Common Stock while any portion of any Options granted
pursuant to this Agreement are outstanding but unexercised, the Company shall
make such adjustments in the character and number of Shares subject to such
Options and in the Option Price (per Share) as shall be equitable and
appropriate in order to make such Options, as nearly as may be practicable,
equivalent to such Options immediately prior to such change; PROVIDED, HOWEVER,
that no such adjustment shall give Optionee any additional benefits under this
Agreement; and PROVIDED FURTHER, if any such adjustment is made by reason of a
transaction described in section 424(a) of the Code, it shall be made so as to
conform to the requirements of that section and the regulations thereunder.
If any transaction (other than a change specified in the
preceding paragraph) described in section 424(a) of the Code affects the
Company's Common Stock subject to any unexercised Option granted hereunder
(hereinafter for purposes of this Paragraph 3 referred to as the "old option"),
the Board of Directors of the Company or any surviving or acquiring corporation
may take such action as it deems appropriate, and in conformity with the
requirements of that section and the regulations thereunder, to substitute a new
option for the old option, in order to make the new option, as nearly as may be
practicable, equivalent to the old option, or to assume the old option.
If any such change or transaction shall occur, the number and
kind of Shares to be issued upon the exercise of any Options shall be adjusted
to give effect thereto.
4. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Shares
subject to Options may be commingled with any other corporate funds and used for
any corporate purpose.
5. GENERAL
(a) Any communication in connection with this Agreement shall
be deemed duly given when delivered in person (including by courier
service) or mailed by certified or registered mail, return receipt
requested, to Optionee at Optionee's address listed on the signature
page hereof or such other address of which Optionee shall have advised
the Company by similar notice; and to the Company at the Company's then
executive offices.
5
(b) This Agreement sets forth the parties' final and entire
agreement with respect to its subject matter, may not be changed or
terminated orally and shall be governed by and construed in accordance
with the internal laws of the State of Florida. This Agreement shall
bind and inure to the benefit of Optionee, and Optionee's heirs,
distributees and personal and legal representatives, and the Company
and its successors and assigns.
(c) Wherever from the context it appears appropriate, each
term stated in either the singular or the plural shall include the
singular and the plural, and pronouns stated in the masculine, the
feminine or the neuter gender shall include the masculine, feminine and
neuter.
IN WITNESS WHEREOF, the parties have duly executed this Stock
Option Agreement as of the date first above written.
OPTIONEE: OMEGA RESEARCH, INC., a Florida
corporation
----------------------------- By:
-----------------------------
Xxxxxxx Xxxxxx, President
-----------------------------
Address
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EXHIBIT "F"
INVESTMENT ACKNOWLEDGMENT AGREEMENT ("Agreement") dated as of October
25, 1999, from the undersigned stockholder ("Stockholder") to and in favor of
mega Research, Inc., a Florida corporation ("Parent").
This Agreement executed and delivered pursuant to Section 5.16 of the
Agreement and Plan of Merger dated as of October 25, 1999 (the "Merger
Agreement"), among Parent, WOW Acquisition Corporation, a Texas corporation and
wholly owned subsidiary of Parent, and Window on WallStreet Inc., a Texas
corporation ("Company"). In order to induce Parent to consummate the
transactions contemplated by the Merger Agreement, and in further consideration
therefor, Stockholder is executing and delivering this Agreement to Parent in
connection with the shares of Parent common stock, $.01 par value, being issued
to Stockholder (collectively, the "Shares"). Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Merger Agreement.
Accordingly, it is hereby understood, acknowledged, covenanted and
agreed by Stockholder as follows:
1. INVESTMENT REPRESENTATION. The Shares are being acquired by
Stockholder for Stockholder's own account, for investment and not with a view to
or for resale in connection with any distribution thereof, nor with any present
intention of selling or distributing all or any part thereof. Stockholder has
been informed and understands that Stockholder must bear the economic risk of
the investment in the Shares for an indefinite period because they have not been
registered as of the Closing Date under the Securities Act of 1933, as amended
(the "Securities Act"), or applicable state securities laws, and cannot be
resold unless they are so registered or an exemption from such registrations are
available. Stockholder further understands that the issuance of the Shares has
not been approved or disapproved by the SEC, any state securities administrator
or any other Governmental Entity. Stockholder acknowledges that Stockholder is
able to bear the economic risk of such investment.
2. ACCESS TO INFORMATION. Stockholder acknowledges that Stockholder has
received and had an opportunity to review the Merger Agreement and the Exhibits
and Schedules thereto and Parent has made available to Stockholder through
Company all of the Parent SEC Documents and the financial statements and
exhibits thereto; and that Stockholder has been afforded the opportunity to ask
questions of Parent and its representatives to verify the information and
disclosures concerning Parent and the accuracy thereof.
3. RESALE RESTRICTION. Stockholder will not at any time offer or sell
all or any part of the Shares unless (a) a registration statement under the
Securities Act is in effect with respect thereto; or (b) an opinion of
Stockholder's counsel, in form and substance reasonably satisfactory to Parent
(notice of unacceptability of such opinion to be given within 7 business days
after receipt thereof), has been delivered to the effect that such offer or sale
is an exempt transaction under the Securities
Act or registration thereunder is not required in connection with such offer or
sale; or (c) the SEC (or a member of the staff thereof) has indicated in writing
that "no action" would be taken if the proposed offer or sale were to be made
without the filing of a registration statement; and any certificate issued
representing the Shares bears the following legend:
"The securities represented hereby have not been registered
under the Federal Securities Act of 1933, as amended, or
applicable state securities laws and may not be sold or
transferred in the absence of an effective registration
statement under such Act and applicable state securities laws
or evidence reasonably satisfactory to the issuer that such
registrations are not required."
4. STOP TRANSFERS ORDERS. Parent may instruct the transfer agent for
its common stock to record appropriate "stop transfer orders" on the transfer
books with respect to the Shares.
IN WITNESS WHEREOF, the undersigned has executed this Investment
Acknowledgment Agreement as of the date first written above.
STOCKHOLDER:
Signature: _________________________________
Print Name: ________________________________
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EXHIBIT "G"
REGISTRATION RIGHTS AGREEMENT dated as of October 25,
1999, among Omega Research, Inc., a Florida
corporation (the "Company"), Window on WallStreet
Inc., a Texas corporation ("Window"), and the
individuals and entities named in Schedule I hereto
(herein referred to collectively as the
"Stockholders" and individually as a "Stockholder").
This Agreement is made pursuant to Section 5.17 of the Agreement and
Plan of Merger dated as of October 25, 1999 (the "Merger Agreement"), among the
Company, Wow Acquisition Corporation, a Texas corporation and wholly owned
subsidiary of the Company, and Window. In order to induce the Stockholders to
consummate the transactions contemplated by the Merger Agreement, and in further
consideration therefor, the Company has agreed to execute and deliver this
Agreement and provide the registration rights set forth in this Agreement.
Accordingly, it is hereby agreed as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Merger Agreement. For
purposes of this Agreement the following terms shall have the following
meanings:
"EFFECTIVE PERIOD" means a period commencing on the date the
"shelf" Registration Statement described in Section 3(a) is declared effective
and ending on the earlier of (i) the first date as of which all Registrable
Securities cease to be Registrable Securities and (ii) the second anniversary of
the Closing Date.
"EFFECTIVE TIME" means the date six months after the date of
this Agreement.
"HOLDER" means, subject to Section 9, a holder of Registrable
Securities.
"PROSPECTUS" means the prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means, collectively, (i) the shares
of common stock, $.01 par value, of the Company issued to the Stockholders in
connection with the Merger (collectively, the "Shares"), and (ii) any securities
issued or distributed in respect of any Shares by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise.
"REGISTRATION EXPENSES" means any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation,
(i) all SEC and securities exchange registration and filing fees (including all
expenses incident to any filing with the National Association of Securities
Dealers, Inc.), (ii) all fees and expenses of complying with securities or blue
sky laws, (iii) all printing, messenger and delivery expenses, (iv) all fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange pursuant to Section 5(g), (v) the fees and
disbursements of counsel for the Company and of its independent public
accountants and (vi) the reasonable fees and disbursements of one counsel, other
than the Company's counsel, selected by the Holders of a majority of the
Registrable Securities being registered to represent all Holders of the
Registrable Securities being registered in connection with such registration (it
being understood that any Holder may, at its own expense, retain separate
counsel to represent it in connection with such registration).
"REGISTRATION STATEMENT" means any registration statement of
the Company which covers Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration Statement.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SEC" means the Securities and Exchange Commission.
2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities entitled to the
benefits of this Agreement are the Registrable Securities. For the purposes of
this Agreement, Registrable Securities will cease to be Registrable Securities
when (i) a Registration Statement covering such Registrable Securities has been
declared effective under the Securities Act and they have been disposed of
pursuant to such effective Registration Statement, (ii) such Registrable
Securities are distributed to the public pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act, (iii) such Registrable
Securities shall have been otherwise transferred, new certificates for such
Registrable Securities not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of such
Registrable Securities shall not require registration or qualification of such
Registrable Securities under the Securities Act or any state securities or blue
sky law then in force, (iv) the Effective Period ends, (v) such Registrable
Securities shall have ceased to be outstanding, or (vi) in the written opinion
of counsel to the Company, when all Registrable Securities may be transferred by
the Holders without registration pursuant to Rule 144 under the Securities Act
without regard to the volume limitation or manner of sale limitations contained
therein.
3. REGISTRATION.
(a) SHELF REGISTRATION. The Company shall file and use all
reasonable efforts to cause to be declared effective, not later than the
Effective Time, a "shelf" Registration Statement on any appropriate form
pursuant to Rule 415 (or similar rule that may be adopted by the SEC) under the
Securities Act for all the Registrable Securities, which shall be available for
the sale of the Registrable Securities from time to time on a delayed or
continuous basis. The Company agrees to
2
use its best efforts to keep such Registration Statement continuously effective
and usable until the end of the Effective Period; PROVIDED, HOWEVER, that the
Company may elect that such Registration Statement not be usable during any
Blackout Period (as defined in Section 4).
(b) PIGGYBACK REGISTRATIONS. If, at any time prior to the end
of the Effective Period, the Company proposes to register any of its common
stock under the Securities Act (other than in connection with a merger,
consolidation, exchange offer, recapitalization, reorganization or acquisition,
stock option, stock purchase or stock benefit, compensation or rights plan or
dividend reinvestment plan or pursuant to Form S-4 or S-8 or similar or
successor forms), it will give written notice by registered mail, at least ten
(10) days prior to the filing of each such Registration Statement, to the
Holders of its intention to do so. If any Holder notifies in writing the Company
within ten (10) days after receipt of any such notice of its desire to include
any or all of the Registrable Securities owned by such Holder in such proposed
Registration Statement, the Company shall afford such Holder the opportunity to
have such Registrable Securities (or portion thereof requested by Holder)
included in the Registration Statement.
Not withstanding the provisions of this Section 3(b), the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 3(b) (irrespective of whether a written request
for inclusion of any such Registrable Securities shall have been made) to elect
not to file any such proposed Registration Statement or to withdraw the same
after the filing but prior to the effective date thereof.
If any registration pursuant to this Section 3(b) shall be
underwritten in whole or in part, subject to the agreement of any such
underwriters, the Company may require that the Registrable Securities requested
for inclusion pursuant to this Section 3(b) be included in the underwriting on
the same terms and conditions as the securities otherwise being sold through the
underwriters and that any Holder become a party to the underwriting agreement
being executed and delivered by the Company.
If a piggyback registration hereunder is an underwritten
primary registration on behalf of the Company (in whole or in part), and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) first, all of the securities the Company proposes to sell, and
(ii) second, any Registrable Securities and other securities requested to be
included in such registration (but only to the extent allowed to be included by
the managing underwriters), pro rata among the Registrable Securities and other
securities requested to be included in such registration.
If a piggyback registration hereunder is an underwritten
secondary registration on behalf of holders of the Company's common stock, and
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering, the Company will include in such
registration (i) first, all of the securities requested to be included therein
by the holders requesting such registration pursuant to a demand registration
right, pro rata among such holders, and (ii) second, any Registrable Securities
and other securities requested to be included in such
3
registration (but only to the extent allowed to be included by the managing
underwriters), pro rata among the Registrable Securities and other securities
requested to be included in such registration.
4. BLACKOUT PERIOD. The Company shall be entitled to (i) postpone the
Effective Time of the Registration Statement otherwise required to be prepared
and filed by the Company pursuant to Section 3(a) or (ii) elect that such
Registration Statement not be usable, in each case for a reasonable period of
time, but not in excess of 90 days (a "Blackout Period"), if the Company
determines in good faith that the registration and distribution of Registrable
Securities (or the use of such Registration Statement or related Prospectus)
would interfere with any pending financing (debt or equity), acquisition or
disposition, corporate merger or other reorganization or any other corporate
development involving the Company or any of its subsidiaries or would require
premature disclosure thereof and promptly gives the Holders of Registrable
Securities written notice of such determination, containing a general statement
of the reasons for such postponement or restriction on use and an approximation
of the anticipated delay; PROVIDED, HOWEVER, that the aggregate number of days
included in all Blackout Periods during any consecutive 12 months during the
Effective Period shall not exceed 120 days.
5. REGISTRATION PROCEDURES. In connection with the registration
obligations of the Company pursuant to Section 3 hereof, the Company shall use
its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement or pursuant to
any underwriting agreement executed and delivered in connection with a piggyback
registration pursuant to Section 3(b) (as the case may be), and the Company
will, as expeditiously as possible, so long as not inconsistent with any
underwriting agreement executed and delivered in connection with a piggyback
registration pursuant to Section 3(b);
(a) with respect to a Registration Statement filed pursuant to
Section 3(a), prepare and file with the SEC amendments and
post-effective amendments to such Registration Statement and such
amendments and supplements to the Prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such
registration or as may be required by the rules, regulations or
instructions applicable to the registration form utilized by the
Company or by the Securities Act or rules and regulations thereunder
for shelf registration or as otherwise necessary to keep the
Registration Statement effective for the Effective Period and cause the
Prospectus as so supplemented to be filed pursuant to Rule 424 under
the Securities Act, and to otherwise comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such Registration Statement through the end of the Effective
Period;
(b) furnish to each Holder of such Registrable Securities such
number of copies of such Registration Statement and of each amendment
and post-effective amendment thereto (in each case including all
exhibits), the Prospectus and Prospectus supplement, as applicable, and
such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities by such Holder
(the Company hereby consenting to the use (subject to the limitations
set forth in the last paragraph of this Section 5) of the Prospectus or
any amendment or supplement thereto in connection with such
disposition);
4
(c) use its best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under
such other securities or blue sky laws of such jurisdictions as each
Holder shall reasonably request with respect to a shelf registration
and as the underwriters reasonably request with respect to a piggyback
registration, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in such jurisdictions of the Registrable Securities
owned by such Holder, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
Section 5(c), it would not be obligated to be so qualified, to subject
itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(d) notify each Holder of any such Registrable Securities
covered by such Registration Statement, at any time when a Prospectus
or any Prospectus supplement or post- effective amendment relating
thereto is required to be delivered under the Securities Act within the
Effective Period, of the Company's becoming aware that the Prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and
at the request of any such Holder, prepare and furnish to such Holder a
reasonable number of copies of an amendment or supplement to the
Registration Statement or related Prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(e) notify each Holder of Registrable Securities covered by
such Registration Statement at any time,
(1) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect
to the Registration Statement or any post-effective amendment,
when the same has become effective,
(2) of any request by the SEC for amendments or
supplements to such Registration Statement or the Prospectus
or for additional information, and
(3) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or
the initiation of any proceedings for that purpose;
(f) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the Registration
Statement, an earnings statement which shall satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations
promulgated thereunder; PROVIDED,
5
HOWEVER, that compliance with Rule 158 under the Securities Act shall
be deemed to satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder; and
(g) use its best efforts to cause all such Registrable
Securities to be listed on any securities exchange on which its common
stock is then listed or approved for trading through The Nasdaq Stock
Market or any other inter-dealer quotation system through which its
common stock is then traded, if such Registrable Securities are not
already so listed or traded and if such listing or trading is then
permitted under the rules of such exchange, provide a transfer agent
and registrar for such Registrable Securities covered by such
Registration Statement no later than the effective date of such
Registration Statement and provide certificates for Registrable
Securities covered by and disposed pursuant to such Registration
Statement without any restrictive legends.
The Company may require each Holder of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such Holder and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company or any underwriter may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(d) or the commencement of a Blackout Period, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
Prospectus and Registration Statement covering such Registrable Securities until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(d) or a written notice from the Company of the date of
termination of the applicable Blackout Period (as the case may be), and, if so
directed by the Company, such Holder will deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice at a time
when a shelf Registration Statement filed pursuant to Section 3(a) is effective,
the Effective Period for such shelf Registration Statement for purposes of
Section 5(a) shall be extended by the number of days during the period from the
date of the giving of such notice pursuant to Section 5(d) or the commencement
of the applicable Blackout Period and through the date when each Holder of
Registrable Securities covered by such Registration Statement shall have
received the copies of the supplemented or amended Prospectus contemplated by
Section 5(d) or the date of termination of the applicable Blackout Period (as
the case may be).
6. REGISTRATION EXPENSES. The Company will pay all Registration
Expenses in connection with all registrations of Registrable Securities pursuant
to Section 3, and each Holder shall pay all other transaction expenses
(including, without limitation, all underwriting discounts, commissions and
other brokerage fees and costs) relating to the sale or disposition of such
Holder's Registrable Securities pursuant to the Registration Statement.
6
7. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify each Holder of Registrable Securities, its officers and
directors and each person who controls such Holder (within the meaning
of the Securities Act), and any agent or investment adviser thereof
against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys, fees and expenses of investigation)
incurred by such party pursuant to any actual or threatened action,
suit, proceeding or investigation arising out of or based upon (i) any
untrue or alleged untrue statement of material fact contained in a
Registration Statement, any Prospectus or preliminary Prospectus, or
any amendment or supplement to any of the foregoing or (ii) any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in
the case of a Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, except in each case
insofar as the same arise out of or are based upon any such untrue
statement or omission made in reliance on and in conformity with
information with respect to such indemnified party furnished to the
Company by such indemnified party or its counsel.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In
connection with a Registration Statement, each Holder will furnish to
the Company in writing such information, including with respect to the
name, address and the amount of Registrable Securities held by such
Holder and the manner of distribution of the Registrable Securities, as
the Company reasonably requests for use in such Registration Statement
or the related Prospectus and agrees to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 7(a))
the Company, all other prospective Holders and any underwriter and any
of their respective affiliates, directors, officers and controlling
Persons (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in such Registration
Statement or Prospectus or any amendment or supplement to either of
them or necessary to make the statements therein (in the case of a
Prospectus, in the light of the circumstances then existing) not
misleading, but only to the extent that any such untrue statement or
omission is made in reliance on and in conformity with information with
respect to such Holder furnished to the Company in writing by such
Holder or its counsel.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder agrees to give prompt written
notice to the indemnifying party after the receipt by such indemnified
party of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which
such indemnified party may claim indemnification or contribution
pursuant to this Agreement (provided that failure to give such
notification shall not affect the obligations of the indemnifying
person pursuant to this Section 7 except to the extent the indemnifying
party shall have been actually prejudiced as a result of such failure).
In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified,
7
to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under these indemnification provisions for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred
by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation, unless in the reasonable
judgment of any indemnified party a conflict of interest is likely to
exist between such indemnified party and any other of such indemnified
parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the reasonable fees and expenses of
such additional counsel or counsels. The indemnifying party will not be
subject to any liability for any settlement made without its consent
(which will not be unreasonably withheld).
(d) CONTRIBUTION. If the indemnification from the indemnifying
party provided for in this Section 7 is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted in such
losses, claims, damages, liabilities and expenses, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 7(c), any
legal and other fees and expenses reasonably incurred by such
indemnified party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined
by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 7(d), no Holder of Registrable Securities shall be required to
contribute any amount in excess of the amount by which the total price
at which the Registrable Securities of such Holder were offered to the
public exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue statement or
omission. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 9(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
8
If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Section 7(a) or (b), as the case may be, without
regard to the relative fault of said indemnifying parties or
indemnified party or any other equitable consideration provided for in
this Section 7(d).
(e) The provisions of this Section 7 shall be in addition to
any liability which any party may have to any other party and shall
survive any termination of this Agreement.
(f) Notwithstanding anything to the contrary contained in this
Agreement (including, without limitation, Section 7), to the extent
that Registrable Securities are required by a Holder to be offered
pursuant to an underwritten offering, the terms and provisions of any
underwriting agreement that a Holder is required to execute and deliver
by the underwriter(s) of such offering shall govern and control in all
respects (including, without limitation, with respect to lock-up
periods, indemnification and contribution) whether or not consistent
with the terms and provisions of this Agreement.
8. RULE 144. Until the end of the Effective Period, the Company
covenants that it will file the reports required to be filed by it under the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, made publicly available other information so long as
necessary to permit sales under Rule 144 under the Securities Act), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
9. TRANSFER OF RIGHTS. The rights of the Holders of Registrable
Securities may be transferred to any one or more transferees of such Registrable
Security; PROVIDED, HOWEVER, that such registration rights shall not be
transferred to any transferee of Registrable Securities that is entitled to
freely resell all of such Registrable Securities without registration or
qualification of such securities under the Securities Act or any state
securities or blue sky law then in force. Any transfer of registration rights
pursuant to this Section shall be effective only upon receipt of a written
notice from the relevant Stockholder stating the name and address of any
transferee and identifying the Registrable Securities with respect to which the
rights under this Agreement are being transferred.
10. THIRD-PARTY BENEFICIARIES; BINDING EFFECT. All Holders of
Registrable Securities that have not executed this Agreement as Stockholders are
intended to be third party beneficiaries hereof. The failure of one or more
Stockholders to execute this Agreement shall not effect in any manner the full
enforceability and binding effect of this Agreement against the Company, Window,
any Stockholder executing this Agreement and/or any Stockholder not executing
this Agreement but requesting to dispose or disposing of Registrable Securities
pursuant to a Registration Statement.
9
11. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of at least a majority in number of the
Registrable Securities then outstanding.
(b) NOTICES. All notices and other communications provided for
or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by telex or telecopier,
registered or certified mail (return receipt requested), postage
prepaid or courier guaranteeing next day delivery to the parties at the
following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof). Notices delivered
personally shall be effective upon receipt, notices sent by mail shall
be effective three days after mailing, notices sent by telex shall be
effective when answered back, notices sent by telecopier shall be
effective when receipt is acknowledged, and notices sent by courier
guaranteeing next day delivery shall be effective on the next business
day after timely deliver to the courier:
(i) if to a Holder of Registrable Securities, at the
address of such Holder provided in Schedule I hereto or at
such other address as the applicable Holder may designate to
the Company in writing; and
(ii) if to Window at:
Window on WallStreet Inc.
0000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx,
Chief Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000 x000
with a copy to:
Jenkens & Xxxxxxxxx, PC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
10
(iii) If to the Company at:
Omega Research, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Bilzin Xxxxxxx Xxxx Price & Xxxxxxx LLP
2500 First Union Financial Center
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors of each of the parties;
PROVIDED, HOWEVER, that subject to Section 9, this Agreement and the
provisions of this Agreement that are for the benefit of the Holders
shall not be assignable by any Holder to any Person and any such
purported assignment shall be null and void.
(d) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement. Delivery of any executed signature page by facsimile
transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.
(e) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
(g) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby; it being
intended hereby that all of the rights and privileges of the Company
and the Stockholders shall be enforceable to the fullest extent
permitted by law.
11
(h) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter hereof. There are no restrictions, promises, warranties
or undertakings with respect to the subject matter hereof, other than
those set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to
such subject matter.
[SIGNATURE PAGE IS NEXT PAGE]
12
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
OMEGA RESEARCH, INC.
By:____________________________________
Name: _________________________________
Title: _______________________________
WINDOW ON WALLSTREET INC.
By:____________________________________
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
STOCKHOLDERS:
_________________________________ ____________________________________
Xxxx X. Xxxxxxxx T. Xxxxx Xxxxx
_________________________________ ____________________________________
Xxxxxxx Xxxxx Ashgar Afghani
_________________________________ ____________________________________
Xxxx Xxxxxx Xxxxx Xxxxxx
_________________________________ ____________________________________
Xxxx Xxxxxx Xxxx Xxxxx
_________________________________
Xxxxx Trojan
13
SCHEDULE I
TO THE REGISTRATION RIGHTS AGREEMENT
STOCKHOLDER ADDRESS
----------- -------
Xxxx X. Xxxxxxxx 0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
T. Xxxxx Xxxxx 0000 Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Xxxxxxx Xxxxx 0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Ashgar Afghani 000 X. Xxxxxx
Xxxxx, Xxxxx 00000
Xxxx Xxxxxx 0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Xxxxx Xxxxxx 0000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Xxxx Xxxxxx 0000 Xxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Xxxx Xxxxx 00000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Xxxxx Trojan 0000 Xxxxxxxxx Xxx.
Xxxxxx, XX 00000
EXHIBIT "H"
OPINION LETTER MATTERS
Parent shall have received an opinion, dated the Closing Date, from Company's
counsel, Jenkens & Xxxxxxxxx, PC, in form and substance reasonably satisfactory
to Parent, to the effect that:
(i) Each of Company and its subsidiaries is a corporation duly
incorporated and validly existing and in good standing under
Texas Law and has the requisite corporate power and authority
to own, operate and lease its properties and assets and to
carry on its businesses as now being conducted.
(ii) Company has the requisite corporate power and authority to
enter into, deliver and perform the Agreement and the other
agreements and instruments to be executed and delivered by
Company pursuant to the Agreement and its obligations
hereunder and thereunder; the execution and delivery of the
Agreement and the other agreements and instruments to be
executed and delivered by Company pursuant to the Agreement
and the consummation and performance by Company of the Merger
and other transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the
part of Company as and in the manner required under Texas Law
and Company's articles of incorporation and bylaws, as
amended; the Agreement and the other agreements and
instruments to be executed and delivered by Company pursuant
to the Agreement have been duly executed and delivered by
Company and constitute the legal, valid and binding obligation
of Company, enforceable against the Company in accordance with
their respective terms except as enforceability may be subject
to (A) any applicable bankruptcy, insolvency, reorganization
or other law relating to or affecting creditors' rights and
(B) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law (or such other standard enforceability exception language
reasonably acceptable to Parent and its counsel).
(iii) Neither the execution and delivery of the Agreement by
Company, nor the consummation of the Merger or the other
transactions contemplated by the Agreement, will (A) violate
or conflict with any provision of the articles of
incorporation, as amended, or bylaws, as currently in effect,
of Company, or (B) violate or conflict with any provision of
any Company Authorizations or Governmental Permits known to
counsel or any law, statute, rule or regulation of any
Governmental Entities known to such counsel binding upon the
Company or any of its subsidiaries or any of their respective
businesses or properties, except where such violations or
conflicts would not in the aggregate have a Material Adverse
Effect or materially adversely effect the ability of Company
to consummate the Merger or the other transactions
contemplated by the Agreement or except for the obtaining of
the approval of the NASD and any required state broker-dealer
authorities, or otherwise to the extent and as noted in such
opinion.
(iv) To the knowledge of such counsel, neither the execution and
delivery of the Agreement nor the consummation of the Merger
or the other transactions contemplated by the Agreement will
result in a breach of or constitute a default (or with notice
or lapse of time or both result in a breach of or constitute a
default) under, or give rise to a right of termination,
cancellation, acceleration or repurchase of any obligation or
a right of first refusal with respect to any material property
or asset or a loss of a material benefit or the imposition of
a material penalty under, any of the terms, conditions or
provisions of any Material Contract disclosed in the Company
Disclosure Schedule, except for any such breaches, defaults,
rights, losses or penalties that in the aggregate would not
have any Material Adverse Effect or materially adversely
effect the ability of the Company to consummate the Merger or
the other transactions contemplated by the Agreement and
except to the extent as noted in such opinion.
(v) To our knowledge, and except with respect to filings and
applications with the NASD and state broker-dealer
authorities, no consent, approval, order, certificate or
authorization of, or registration, declaration or filing with,
any Governmental Entity is required by or with respect to
Company or any of its subsidiaries in connection with the
execution and delivery of the Agreement by Company or the
consummation by Company of the Merger and the other
transactions contemplated under the Agreement, other than as
disclosed in Section 2.3 of the Agreement and Schedule 2.3
thereto.
(vi) The authorized capital stock of the Company consists of
50,000,000 shares of Company Common Stock; to the knowledge of
such counsel, there are no options, warrants or other rights,
agreements or claims to purchase any shares of capital stock
of the Company outstanding other than the Company Options;
and, to the knowledge of such counsel, all outstanding shares
of Company Common Stock are duly authorized, validly issued,
fully paid and nonassessable, and are not subject to or issued
in violation of any preemptive rights.
(vii) Subject to the filing of the Articles of Merger as described
in Section 1.2 of the Agreement, the Merger will be effective.
2
